One of the biggest credit card lenders within the United States, the Capital One Financial Corp reported a lower quarterly profit than expected as the company saved up more money in covering up tainted loans. The company’s profit had missed analysts’ estimates due to higher loan loss provisions.
Capital One’s net income, which was attributed to shareholders, fell by 2.9% to $1.06 billion. The fall was approximately $1.86 per share during the third quarter, which ended on September 30 this year, compared to the $1.84 per share or $1.09 billion last year.
Capital One’s credit loss provision indicated an increase by 17% to $993 million the previous year. Thus, the overall net revenue of the credit card issuer was reported at a smooth $5.64 billion.
The average expected earnings by analysts was at $1.94 per share on $5.56 billion revenue. This was based on Thomson Reuter’s analyst’s poll about Capital One’s estimate revenues, thus, Capital One missed the average estimate of analysts.
The company’s larger rival, which is the American Express Co, meanwhile, reported on Wednesday a rise in its quarterly profit. The American Express’ quarterly profit increase was mainly due to U.S. customers. American consumers contributed largely to the company’s profit as they spent more using their credit cards, thus, resulting in interest income increase.
Meanwhile, the net interest income of Capital One, which is the difference between the payout on deposits and bank earnings, fell by 1% to $4.50 billion during the most-recent quarter.
Capital One’s net charge-off rate, which is the loan percentage considered as unrecoverable, was at 1.52%. Experts said it was an indication of a drop of 40 basis points a year earlier for the company.
On Thursday, McLean, the Capital One that is based in Virginia had its shares on the New York Stock Exchange closed at $78.53.