Capital One Profit Rises

(RTTNews) - Capital One Financial Corp. (COF) Thursday reported an increase in fourth-quarter profit as the credit-card lender incurred lower loan losses, offsetting a drop in revenue. However, earnings for the quarter came in below Wall Street estimates even as revenue surpassed expectations.

"Capital One delivered strong financial performance in 2013," said CEO Richard Fairbank. "We remain focused on resilient growth, disciplined cost management, and returning capital to shareholders in 2014."

Capital One specializes in credit cards, home and auto loans, among others. While the company has consistently performed well on the back of higher consumer loans, the recent quarter saw a decline in domestic credit card revenue.

The McLean, Virginia-based company posted fourth-quarter net income to common shares of $842 million or $1.45 per share, up from $825 million or $1.41 per share last year.

On average, 27 analysts polled by Thomson Reuters expected earnings of $1.54 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the fourth quarter slid to $5.54 billion from $5.62 billion a year ago, but topped analysts' estimates of $5.48 billion.

Revenue from domestic card business slid to $3.05 billion from $3.4 billion a year ago, while Consumer Banking revenue was almost flat at $1.66 billion.

The quarter saw net interest margin improve to 6.73 percent from 6.52 percent a year ago.

Loan-loss provision was lower at $957 million, compared with $1.15 billion a year ago.

At the end of the quarter, Capital One had loans held for investment of $197 billion, compared with $206 billion last year.

Capital One has ramped up its loan portfolio by the $2.6 billion purchase of HSBC U.S. Credit Card business in May 2012 and shored up deposits through the $9 billion purchase of ING Direct USA from ING Groep in February that year.

The company also had closed the sale of Best Buy's U.S. credit card portfolio to Citigroup Inc. (C).

Capital One closed Thursday at $76.45, down $0.59 or 0.77%, on a volume of 3.12 million shares on the NYSE. In after hours, the stock dropped $1.44 or 1.88% at $75. In the past year, the stock traded in the range of $50.21 - $78.49, on a three-month average volume of 2.94 million shares.