Capital One reported a net loss last quarter following its acquisition of Discover Financial, but beat estimates on adjusted metrics.
The company’s net loss was US$4.3 billion, down from net income of $597 million one year ago. Adjusted earnings per share were $5.48, above Zacks estimates of $3.83.
“We completed our acquisition of Discover on 18 May. We’re fully mobiliszed and hard at work on integration which is going well,” said Capital One CEO Richard D. Fairbank. “We’re as excited as ever by the expanding set of opportunities to grow and create value as a combined company.”
Capital One’s total net revenue last quarter was US$12.49 billion, rising by 31% year-over-year and surpassing estimates of $12.22 billion.
Its non-interest expenses grew by 26% year-over-year to US$6.99 billion, with operating expenses up by 45% and marketing expenses up by 26%.
The company’s provision for credit losses was US$11.43 billion, increasing 192% from 2024’s second quarter.
Capital One said in 2024 that it would purchase Discover Financial for US$35.3 billion, and the deal was approved by regulators in April. The acquisition has made Capital One the largest credit card issuer in the United States, as Discover was previously the third-largest.
Discover’s credit cards will continue to be issued by Capital One following the purchase, the company said in May.
According to Capital One, Discover’s integration expenses were US$299 million, with an initial allowance build of $8.77 billion for Discover’s loans not purchased with credit deterioration.
Capital One’s (NYSE: COF) share price closed at US$217.42, up from its previous close of $215.97, and climbed to $224.66 in after-hours trading. Its market capitalisation is $139.18 billion.
