Capital One missed earnings estimates last quarter amid a sharp rise in expenses, and said it would acquire payments company Brex.
Earnings per share were US$3.86, up from $3.09 one year ago but below Visible Alpha estimates of $4.14. Revenue grew by 1% to $15.58 billion, passing estimates of $15.5 billion.
"Our fourth quarter and full year results reflect solid top line growth and strong and stable credit performance," said Capital One CEO Richard Fairbank.
"Years of strategic preparation and our choices to consistently invest to sustain long-term growth and returns enable our results and put us in a strong position going forward. I’m struck by the number and quality of the opportunities we have before us.”
Non-interest expenses rose 13% to $9.34 billion, driven by a 38% increase in marketing expenses and 8% growth in operating expenses.
Capital One’s provision for credit losses grew 57% year-over-year to $4.14 billion, with net charge-offs of $3.83 billion. Its CET1 capital ratio was 14.3% at the end of the quarter.
Pre-tax income from continuing operations was $2.10 billion, up 44%.
Capital One will buy Brex for $5.15 billion, the company said, including 50% cash and 50% stock. The purchase is set to close in mid-2026.
Brex provides corporate credit cards and cash management accounts. It was valued at $12.3 billion in 2023.
Capital One (NYSE: COF) shares closed 1.8% higher at $235.07, before dropping 3.3% after-hours. Its market capitalisation is $149.44 billion.
