Capital One Q3 Results Beat Street Estimates on Strong Net Interest Income

October 21 00:00 2011

New York, October 21 ( – McLean, Virginia-based Capital One Financial Corp (NYSE: COF) posted better-than-expected profits for Q3 on Thursday, helped by higher net income interest and the fact that the bank had to put aside less money for loan losses. Moreover, its commercial loans grew faster than its credit card and consumer loans during the quarter.

Capital One’s results are indicative of the importance of other borrowers as part of a transformation that started before the 2008 financial crisis. Whereas commercial loans went up by 8 percent, consumer and credit card loans both rose about 1 percent. Capital One had announced in June a $9 billion proposed purchase of ING Groep NV’s US online bank operations as the latest step in that transformation.

Jason Arnold, financial services analyst with RBC Capital Markets said, “They’re still a very card focused company, but ancillary growth in other parts of the business is welcome in this kind of environment.”

Capital One’s net interest margin rose during the quarter to 7.39 percent from 7.21 percent. As a result, net interest income rose 5.5 percent to $3.28 billion. Its third-quarter net income was reported as $813 million, or $1.77 per share, up from $803 million, or $1.76 per share, a year ago. Analysts had projected that on average the bank would earn $1.68 per share. Total revenues rose 3.4 percent to $4.15 billion from $4 billion a year ago.