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NII & Fee Income to Support COF's Q1 Earnings Amid Rising Provisions
Capital OneCapital One(US:COF) ZACKSยท2025-04-15 16:20

Core Viewpoint - Capital One (COF) is expected to report an increase in both earnings and revenues for the first quarter of 2025, driven by higher net interest income and improved lending conditions [1][15]. Group 1: Financial Performance Expectations - COF's earnings are projected to grow by 16.8% year-over-year, with a consensus estimate of $3.75 per share [15]. - The consensus estimate for total revenues is $10.03 billion, indicating a 6.7% increase from the previous year [15]. - The total average earning assets are estimated at $461 billion, reflecting a 3% rise from the prior-year quarter [4]. Group 2: Key Revenue Drivers - Net interest income (NII) is expected to reach $8.02 billion, representing a 7.1% growth year-over-year, supported by stable interest rates and a steepened yield curve [5][3]. - Interchange fees, which account for over 60% of fee income, are projected to be $1.22 billion, suggesting a 6.9% year-over-year increase due to higher card usage [6]. - Total non-interest income is estimated at $2 billion, indicating a 4.7% rise from the prior-year quarter [8]. Group 3: Expense and Provision Outlook - Total non-interest expenses are expected to be $5.40 billion, reflecting a 5.2% year-over-year increase, driven by higher marketing costs and technology investments [8][9]. - The provision for credit losses is estimated at $2.6 billion, which is a 3.2% decrease from the previous year, despite ongoing economic pressures [10]. Group 4: Major Developments - Capital One's acquisition of Discover Financial Services has been approved, with the merger completion date set for May 19, 2025 [12]. - Following the merger, Capital One shareholders will own approximately 60% of the combined entity, while Discover Financial shareholders will hold nearly 40% [13].