Capital One(US:COF) ZACKSยท2025-10-15 13:11Core Insights - Capital One (COF) is expected to report third-quarter 2025 results on October 21, with revenues anticipated to rise year-over-year, while earnings are likely to decline [1][10]. Financial Performance - In Q2, COF's earnings exceeded the Zacks Consensus Estimate, supported by the Discover Financial acquisition, increased net interest income (NII), and improved loan balances, despite rising expenses and provisions [2]. - COF has a strong earnings surprise history, surpassing the Zacks Consensus Estimate in the last four quarters with an average surprise of 23.02% [3]. Key Factors for Q3 Earnings - The lending environment improved in Q3 due to clarity on macro issues, with the Zacks Consensus Estimate for total average earning assets at $577.1 billion, reflecting a 9.9% increase from the previous quarter [4]. - NII is projected to grow sequentially by 19.7% to $11.96 billion, driven by loan growth and stable rates [6]. - Interchange fees, which make up over 60% of fee income, are expected to rise by 23.5% sequentially to $1.82 billion due to increased card usage [7]. - Total non-interest income is estimated to surge by 19.2% to $2.98 billion, with service charges and other customer-related fees expected to grow by 20.5% to $792.4 million [8][9]. Expenses and Asset Quality - Total non-interest expenses are anticipated to rise by 32.5% to $8.26 billion, influenced by higher marketing costs, technology investments, and the Discover Financial acquisition [9]. - Provisions for credit losses are estimated at $3.51 billion, reflecting concerns over potential delinquent loans amid rising loan balances [11]. Earnings Expectations - The likelihood of COF beating the Zacks Consensus Estimate for earnings is high, supported by a positive Earnings ESP of +1.62% and a Zacks Rank of 2 (Buy) [12][13]. - The consensus estimate for Q3 earnings is $4.23, indicating a 6.2% decline from the prior year, while sales are expected to jump by 48.8% to $14.9 billion [13].