Capital One And Fifth Third Bancorp's Capital Strength And Growth Prospects; Analyst Sees Upside

Capital One Financial Corporation (COF) - The company reported decent results for the fourth quarter, with stabilizing credit metrics, decreasing losses, and a continued downward trend in allowances [1] - The DFS deal is expected to increase EPS power to over $22, with no major efficiency risks despite compliance investments [2] - Capital One Financial's strong CET1 ratio positions it to return significant capital in the future [2] - Shares are currently trading at just over 10x 2026E EPS, with potential upside as the market gains confidence in the company's earnings and network scalability [2] Fifth Third Bancorp (FITB) - The company reported a solid fourth quarter PPNR beat, driven by stronger than expected fees, while expenses and NII were in-line [3] - The beat on fees was driven by strength in commercial banking and capital markets, with the three-pronged fee strategy (wealth, payments, and capital markets) delivering strong results [3] - The analyst is optimistic about Fifth Third's fundamentals, citing record net interest income in 2025, improved loan growth, and margin expansion [4] - Fee income growth is a strength, and with a CET1 ratio of 10.5%, FITB is well-positioned for capital returns [4] - Shares are trading at a slight premium to peers, but the analyst sees the company maintaining or even widening that premium if it continues executing well and driving positive operating leverage while investing for growth [4]