Capital One Finance Beats Q2 Estimates, Shares Gain in Afterhours (COF)

Capital One Finance Corp. (NYSE: COF) reported sharp jump in net income for its fiscal second-quarter as interest income from credit card business grew sharply amid significantly improving U.S. macroeconomic environment. Commenting over strong quarterly results, Capital One Finance Corp’s Chief Executive Richard Fairbank said, “We delivered solid performance across each of our businesses during the quarter,” adding that the company will give utmost attention to managing the credit quality and costs. The McLean, Virginia-based Company, which provides credit cards, auto loans and home loans along with some other banking products, has been witnessing steady growth in the demand for loans as the U.S. economy continues to recover, gradually. For the fiscal second quarter, Capital One reported a profit of $1.10 billion or $1.87 a share up from a net income of $92 million or 16 cents a share. Revenue rose to $5.6 billion from $5 billion, Analysts’ consensus estimate was for earnings of $1.72 a share on revenue of $5.53 billion, according to a data compiled by Thomson Reuters. Net interest margin rose to 6.83% from 6.04%, in the same quarter of last year. Revenue from the domestic credit card business climbed to $3.6 billion from $3.1 billion, in the year earlier period. Revenue from the consumer banking business slipped by $14 million to $1.667 billion while revenue from commercial banking segment rose to $550 million from $509 million in the fiscal second quarter. Provisions for losses from loans fell to $762 million compared to $1.68 billion, in the same period of last year, Delinquencies, however, jumped to $969 million from $738 million, in the year ago period. By the end of the quarter, the Company held $191.5 billion in loans meant for investments compared to $202.7 billion, in the same period of last fiscal year. Capital One has increased its loan portfolio in the recent past by acquiring HSBC U.S. credit card business for $2.6 billion in May 2012 while deposits have also soared due to the purchase of ING Direct USA from ING for $9 billion, last February. Shares of Capital One gained 2.31% in afterhours trading on Monday, having edged up 0.22% to $67/05 in regular trading hours on Thursday.