Capital One(COF) - 2025 Q1 - Quarterly Results

Consolidated Results This section details Capital One Financial Corporation's consolidated financial performance and key metrics Financial Summary—Consolidated Capital One Financial Corporation's Q1 2025 consolidated financial summary reports a net income of $1,404 million, up 28% QoQ and 10% YoY, with diluted EPS rising to $3.45, alongside modest growth in loans and deposits despite a slight QoQ revenue decrease Consolidated Financial Summary (Dollars in millions, except per share data) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Non-interest income | $1,987 | $2,092 | $1,914 | (5)% | 4% | | Total net revenue | $10,000 | $10,190 | $9,402 | (2)% | 6% | | Provision for credit losses | $2,369 | $2,642 | $2,683 | (10)% | (12)% | | Total non-interest expense | $5,902 | $6,089 | $5,137 | (3)% | 15% | | Net income | $1,404 | $1,096 | $1,280 | 28% | 10% | | Net income per diluted common share | $3.45 | $2.67 | $3.13 | 29% | 10% | | Loans held for investment (period-end) | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Total deposits (period-end) | $367,464 | $362,707 | $350,969 | 1% | 5% | | Common equity (period-end) | $58,697 | $55,938 | $52,955 | 5% | 11% | Selected Metrics—Consolidated Q1 2025 consolidated metrics reveal improved return on average assets and common equity QoQ, strengthened capital ratios, and decreased credit loss allowance and delinquency rates, despite slight QoQ declines in net interest and total net revenue margins Selected Consolidated Metrics | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change | YoY Change | | :--------------------------------- | :------ | :------ | :------ | :--------- | :--------- | | Total net revenue margin | 8.64% | 8.85% | 8.40% | (21) bps | 24 bps | | Net interest margin | 6.93% | 7.03% | 6.69% | (10) bps | 24 bps | | Return on average assets | 1.14% | 0.90% | 1.08% | 24 bps | 6 bps | | Return on average common equity | 9.23% | 7.16% | 9.03% | 207 bps | 20 bps | | Efficiency ratio | 59.02% | 59.75% | 54.64% | (73) bps | 438 bps | | Allowance for credit losses | $15,899 | $16,258 | $15,380 | (2)% | 3% | | Net charge-off rate | 3.40% | 3.59% | 3.33% | (19) bps | 7 bps | | 30+ day performing delinquency rate | 3.29% | 3.69% | 3.40% | (40) bps | (11) bps | | Common equity Tier 1 capital | 13.6% | 13.5% | 13.1% | 10 bps | 50 bps | | Tangible common equity ("TCE") | 9.1% | 8.6% | 8.1% | 50 bps | 100 bps | Consolidated Statements of Income Q1 2025 consolidated statements of income show a 28% QoQ increase in net income, driven by a significant reduction in provision for credit losses and modest non-interest expense decrease, despite slight QoQ declines in net interest and non-interest income Consolidated Statements of Income (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total interest income | $11,418 | $11,717 | $11,177 | (3)% | 2% | | Total interest expense | $3,405 | $3,619 | $3,689 | (6)% | (8)% | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Provision for credit losses | $2,369 | $2,642 | $2,683 | (10)% | (12)% | | Total non-interest income | $1,987 | $2,092 | $1,914 | (5)% | 4% | | Total non-interest expense | $5,902 | $6,089 | $5,137 | (3)% | 15% | | Income from continuing operations, net of tax | $1,404 | $1,093 | $1,280 | 28% | 10% | | Net income available to common stockholders | $1,325 | $1,022 | $1,200 | 30% | 10% | Consolidated Balance Sheets Capital One's Q1 2025 consolidated balance sheet reports a 1% QoQ and 2% YoY increase in total assets to $493,604 million, with total deposits growing 1% QoQ and 5% YoY, alongside a slight QoQ decrease in loans held for investment and a modest reduction in allowance for credit losses Consolidated Balance Sheet (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total cash and cash equivalents | $48,573 | $43,230 | $51,028 | 12% | (5)% | | Securities available for sale | $84,362 | $83,013 | $78,398 | 2% | 8% | | Total loans held for investment | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Allowance for credit losses | $(15,899) | $(16,258) | $(15,380) | (2)% | 3% | | Total assets | $493,604 | $490,144 | $481,720 | 1% | 2% | | Total deposits | $367,464 | $362,707 | $350,969 | 1% | 5% | | Securitized debt obligations | $11,716 | $14,264 | $17,661 | (18)% | (34)% | | Total stockholders' equity | $63,542 | $60,784 | $57,801 | 5% | 10% | Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4) This section clarifies definitions and methodologies for key financial metrics and non-GAAP measures, including total net revenue adjustments, EPS computation, and the non-GAAP nature of tangible book value and efficiency ratios, with reconciliations in Table 15 - Total net revenue is reduced by credit card finance charges and fees charged-off as uncollectible. For Q1 2025, this reduction was $705 million[11] - Tangible book value per common share, return on average tangible assets, return on average tangible common equity, efficiency ratio, and operating efficiency ratio are non-GAAP measures. Reconciliations are provided in Table 15[11] - Capital ratios for Q1 2025 are preliminary and subject to change[11] Average Balances, Net Interest Income and Net Interest Margin Q1 2025 saw average interest-earning assets and liabilities increase QoQ and YoY, with net interest income decreasing 1% QoQ but rising 7% YoY, resulting in a net interest margin of 6.93%, a slight QoQ decline but a 24 bps YoY improvement Average Balances, Net Interest Income and Net Interest Margin (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total interest-earning assets (Average Balance) | $462,771 | $460,640 | $447,803 | — | 3% | | Total interest-bearing liabilities (Average Balance) | $384,214 | $379,817 | $370,870 | 1% | 4% | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Net interest margin | 6.93% | 7.03% | 6.69% | (10) bps | 24 bps | | Average yield on loans | 12.59% | 12.95% | 12.57% | (36) bps | 2 bps | | Average rate on interest-bearing deposits | 3.22% | 3.45% | 3.53% | (23) bps | (31) bps | Loan Information and Performance Statistics Q1 2025 loan information indicates a slight QoQ decrease in total loans held for investment, primarily from domestic credit cards, but a 3% YoY increase, alongside QoQ improvements in net charge-off rates across all segments and falling delinquency rates Loan Information and Performance Statistics (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total loans held for investment (Period-End) | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Domestic credit card (Period-End) | $150,309 | $155,618 | $143,861 | (3)% | 4% | | Auto loans (Period-End) | $77,656 | $76,829 | $73,801 | 1% | 5% | | Total net charge-off rate | 3.40% | 3.59% | 3.33% | (19) bps | 7 bps | | Domestic credit card net charge-off rate | 6.19% | 6.06% | 5.94% | 13 bps | 25 bps | | Auto net charge-off rate | 1.55% | 2.32% | 1.99% | (77) bps | (44) bps | | Total 30+ day performing delinquency rate | 3.29% | 3.69% | 3.40% | (40) bps | (11) bps | | Total nonperforming loans rate | 0.56% | 0.61% | 0.57% | (5) bps | (1) bps | Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity Q1 2025 saw the allowance for credit losses decrease by $368 million QoQ to $15,899 million, mainly due to the credit card segment, with net charge-offs of $2,736 million offset by $956 million in recoveries, and a stable reserve for unfunded lending commitments Allowance for Credit Losses and Reserve Activity (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | QoQ Change | | :--------------------------------- | :------ | :------ | :--------- | | Balance as of period-end (Allowance for credit losses) | $15,899 | $16,258 | $(359) | | Net charge-offs | $(2,736) | $(2,884) | $148 | | Provision for credit losses | $2,368 | $2,642 | $(274) | | Allowance build (release) for credit losses | $(368) | $(262) | $(106) | | Reserve for unfunded lending commitments (period-end) | $144 | $143 | $1 | | Combined allowance and reserve | $16,043 | $16,401 | $(358) | Business Segment Results This section presents the financial performance and key statistics for Capital One's Credit Card, Consumer Banking, and Commercial Banking segments Financial Summary—Business Segment Results In Q1 2025, the Credit Card segment significantly increased income from continuing operations by 41% QoQ, remaining the largest contributor to net interest income and total net revenue, while Consumer Banking saw a slight decrease and Commercial Banking a 50% QoQ decline due to higher credit loss provisions Financial Summary—Business Segment Results (Dollars in millions) | Segment | Net Interest Income (2025 Q1) | Total Net Revenue (2025 Q1) | Income from Continuing Operations, Net of Tax (2025 Q1) | | :-------------------- | :---------------------------- | :-------------------------- | :------------------------------------------------------- | | Credit Card | $5,654 | $7,165 | $1,219 | | Consumer Banking | $1,943 | $2,126 | $186 | | Commercial Banking | $572 | $884 | $195 | | Other | $(156) | $(175) | $(196) | | Total | $8,013 | $10,000 | $1,404 | - QoQ Change in Income from Continuing Operations, Net of Tax: - Credit Card: +41% (from $866 million in Q4 2024 to $1,219 million in Q1 2025)[16] - Consumer Banking: -9% (from $205 million in Q4 2024 to $186 million in Q1 2025)[16] - Commercial Banking: -50% (from $388 million in Q4 2024 to $195 million in Q1 2025)[16] Financial & Statistical Summary—Credit Card Business The Credit Card business reported a strong Q1 2025, with income from continuing operations increasing by 41% QoQ and 27% YoY to $1,219 million, driven by a 19% QoQ decrease in provision for credit losses, despite a slight QoQ decline in total net revenue Credit Card Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $5,654 | $5,779 | $5,272 | (2)% | 7% | | Total net revenue | $7,165 | $7,364 | $6,748 | (3)% | 6% | | Provision for credit losses | $1,926 | $2,384 | $2,259 | (19)% | (15)% | | Income from continuing operations, net of tax | $1,219 | $866 | $961 | 41% | 27% | | Average loans held for investment | $156,407 | $157,326 | $149,645 | (1)% | 5% | | Net charge-off rate | 6.14% | 6.02% | 5.90% | 12 bps | 24 bps | | 30+ day performing delinquency rate | 4.26% | 4.53% | 4.50% | (27) bps | (24) bps | | Purchase volume | $157,948 | $172,919 | $150,171 | (9)% | 5% | | Domestic Card: Greater than 660 FICO scores | 69% | 69% | 68% | — | 1% | Financial & Statistical Summary—Consumer Banking Business The Consumer Banking business reported a Q1 2025 income from continuing operations of $186 million, a 9% QoQ and 51% YoY decrease, despite improved credit quality metrics with a 78 bps QoQ decrease in net charge-off rate and falling delinquency rates Consumer Banking Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $1,943 | $1,959 | $2,011 | (1)% | (3)% | | Total net revenue | $2,126 | $2,141 | $2,170 | (1)% | (2)% | | Provision for credit losses | $301 | $328 | $426 | (8)% | (29)% | | Income from continuing operations, net of tax | $186 | $205 | $381 | (9)% | (51)% | | Average loans held for investment | $78,480 | $77,221 | $75,092 | 2% | 5% | | Auto loan originations | $9,210 | $9,399 | $7,522 | (2)% | 22% | | Average deposits | $319,950 | $313,992 | $294,448 | 2% | 9% | | Net charge-off rate | 1.60% | 2.38% | 2.03% | (78) bps | (43) bps | | 30+ day performing delinquency rate | 4.87% | 5.87% | 5.21% | (100) bps | (34) bps | | Auto—At origination FICO scores: Greater than 660 | 53% | 54% | 53% | (1)% | — | Financial & Statistical Summary—Commercial Banking Business The Commercial Banking business reported a Q1 2025 income from continuing operations of $195 million, a 50% QoQ and 30% YoY decrease, primarily due to a $142 million provision for credit losses compared to a prior quarter benefit, despite stable loan and deposit balances Commercial Banking Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $572 | $587 | $599 | (3)% | (5)% | | Total net revenue | $884 | $953 | $880 | (7)% | — | | Provision (benefit) for credit losses | $142 | $(72) | $(2) | ** | ** | | Income from continuing operations, net of tax | $195 | $388 | $280 | (50)% | (30)% | | Average loans held for investment | $87,498 | $87,324 | $89,877 | — | (3)% | | Average deposits | $31,654 | $31,545 | $31,844 | — | (1)% | | Net charge-off rate | 0.11% | 0.26% | 0.13% | (15) bps | (2) bps | | Nonperforming loan rate | 1.40% | 1.39% | 1.28% | 1 bps | 12 bps | | Criticized performing loans as % of total | 6.41% | 6.35% | 8.39% | 6 bps | (198) bps | | Criticized nonperforming loans as % of total | 1.40% | 1.39% | 1.28% | 1 bps | 12 bps | Financial & Statistical Summary—Other and Total The 'Other' segment reported a Q1 2025 net loss from continuing operations of $196 million, a 46% QoQ and 43% YoY improvement, while consolidated total net revenue slightly decreased QoQ but increased YoY, with net income seeing a significant QoQ rise 'Other' Segment Summary (Dollars in millions) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest loss | $(156) | $(227) | $(394) | (31)% | (60)% | | Total net loss | $(175) | $(268) | $(396) | (35)% | (56)% | | Loss from continuing operations, net of tax | $(196) | $(366) | $(342) | (46)% | (43)% | Total Consolidated Summary (Dollars in millions) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Total net revenue | $10,000 | $10,190 | $9,402 | (2)% | 6% | | Income from continuing operations, net of tax | $1,404 | $1,093 | $1,280 | 28% | 10% | | Period-end loans held for investment | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Period-end deposits | $367,464 | $362,707 | $350,969 | 1% | 5% | Other Disclosures This section provides additional disclosures, including notes to financial statements, regulatory capital calculations, and reconciliations of non-GAAP financial measures Notes to Net Interest Margin, Loan, Allowance and Business Segment Disclosures (Tables 6—13) This section provides important contextual notes and definitions for financial and statistical data in Tables 6-13, detailing the impact of the Walmart Program Termination on net interest margin and domestic card net charge-off rates, clarifying credit quality terms, and outlining Discover integration expenses and FDIC special assessments - The termination of the Walmart program agreement increased net interest margin by 20 basis points in Q1 2025 and 21 basis points in Q4 2024. Excluding this impact, the net interest margin would have been 6.73% and 6.82% respectively[24] - The Walmart Program Termination also increased the Domestic Card net charge-off rate by 42 basis points in Q1 2025 and 40 basis points in Q4 2024[24] - Non-interest expense in Q1 2025 includes $110 million in Discover integration expenses, following $140 million in Q4 2024[24] - Criticized exposures correspond to 'Special Mention,' 'Substandard,' and 'Doubtful' asset categories as defined by bank regulatory authorities[24] Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures This section details Capital One's regulatory capital measures under Basel III and provides comprehensive reconciliations for various non-GAAP financial metrics, offering alternative views of the company's financial health and operating performance Regulatory Capital Metrics This subsection presents Capital One's regulatory capital metrics, including Common Equity Tier 1, Tier 1, and Total Capital ratios, along with risk-weighted assets and the Tangible Common Equity ratio Regulatory Capital Metrics (Dollars in millions, except as noted) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--------------------------------- | :------------- | :---------------- | :------------- | | Common equity Tier 1 capital | $51,205 | $50,807 | $48,007 | | Tier 1 capital | $56,050 | $55,652 | $52,852 | | Total capital | $63,930 | $61,805 | $59,484 | | Risk-weighted assets | $375,874 | $377,145 | $366,161 | | Common equity Tier 1 capital ratio | 13.6% | 13.5% | 13.1% | | Tier 1 capital ratio | 14.9% | 14.8% | 14.4% | | Total capital ratio | 17.0% | 16.4% | 16.2% | | Tier 1 leverage ratio | 11.6% | 11.6% | 11.3% | | TCE ratio | 9.1% | 8.6% | 8.1% | - Regulatory capital metrics and capital ratios as of March 31, 2025, are preliminary and subject to change[33] Reconciliation of Non-GAAP Measures This subsection provides detailed reconciliations of non-GAAP financial measures, including adjusted diluted EPS, efficiency ratios, tangible common equity, and related performance indicators, to their most directly comparable GAAP measures Adjusted Diluted Earnings Per Share (Dollars in millions, except per share data) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Net income available to common stockholders (GAAP) | $1,325 | $1,022 | $1,200 | | Legal reserve activities | $198 | $75 | — | | Discover integration expenses | $110 | $140 | — | | Adjusted net income available to common stockholders (non-GAAP) | $1,557 | $1,185 | $1,232 | | Diluted EPS (GAAP) | $3.45 | $2.67 | $3.13 | | Adjusted diluted EPS (non-GAAP) | $4.06 | $3.09 | $3.21 | Adjusted Efficiency Ratios (Dollars in millions, except as noted) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Non-interest expense (GAAP) | $5,902 | $6,089 | $5,137 | | Adjusted non-interest expense (non-GAAP) | $5,594 | $5,874 | $5,095 | | Total net revenue (GAAP) | $10,000 | $10,190 | $9,402 | | Adjusted net revenue (non-GAAP) | $10,000 | $10,190 | $9,402 | | Efficiency ratio (GAAP) | 59.02% | 59.75% | 54.64% | | Adjusted efficiency ratio (non-GAAP) | 55.94% | 57.64% | 54.19% | | Operating expense (GAAP) | $4,700 | $4,714 | $4,127 | | Adjusted operating expense (non-GAAP) | $4,392 | $4,499 | $4,085 | | Operating efficiency ratio (GAAP) | 47.00% | 46.26% | 43.89% | | Adjusted operating efficiency ratio (non-GAAP) | 43.92% | 44.15% | 43.45% | Tangible Common Equity & Assets (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Tangible common equity (Period-End) | $43,558 | $40,782 | $37,699 | | Tangible common equity (Average) | $42,246 | $41,724 | $37,873 | | Return on tangible common equity (Average) | 12.55% | 9.77% | 12.67% | | Tangible assets (Period-End) | $478,465 | $474,987 | $466,463 | | Tangible assets (Average) | $476,668 | $473,105 | $459,715 | | Return on tangible assets (Average) | 1.18% | 0.92% | 1.11% | | Tangible book value per common share | $113.74 | $106.97 | $98.67 |