Core Insights - FIS reported strong demand for core banking solutions, leading to recurring revenue growth and positive pipeline momentum [1][2] - The acquisition of Global Payments' issuing business (TSYS) is a strategic move that will enhance FIS' capabilities and cross-selling opportunities [1][6] Financial Performance - Recurring revenue growth accelerated to 4% in Q1 from 2%, with recurring revenue making up 81% of total sales [3] - Banking solutions segment revenues increased by 2% to $1.7 billion, while capital markets segment revenues grew by 9% to $764 million [3] Strategic Initiatives - The "Money at Rest" strategy remains strong, with expectations for solid sales growth driven by financial services consolidation [4] - The digital solutions segment is gaining traction as banks modernize their technologies, contributing to growth in the "Money in Motion" efforts [5] Future Outlook - FIS anticipates adjusted revenue growth of 4.2% to 5% in Q2, with banking revenue growth projected at 3.7% to 4.4% [7] - The acquisition of TSYS is expected to add $2.5 billion to operations, increasing annualized sales to a total of $9.4 billion on a pro forma basis [9] Market Positioning - FIS is uniquely positioned in the market with a comprehensive product suite that includes credit capabilities, enhancing cross-selling potential [6][11] - The company is not observing any slowdown in client spending, indicating robust market demand [8]

Financial Data and Key Metrics Changes - The company reported adjusted revenue growth of 4% in Q1 2025, exceeding expectations [7][16] - Adjusted EBITDA was $958 million, leading to an EBITDA margin of 37.8% [16][17] - Adjusted EPS grew 11% to $1.21, at the upper end of the outlook [8][17] - Free cash flow conversion exceeded 70%, with free cash flow of $368 million compared to $95 million last year [17][18] - The company returned $670 million to shareholders through share repurchases and dividends [8][19] Business Line Data and Key Metrics Changes - Banking segment revenue grew 2%, with recurring revenue growth at 3% [20][21] - Capital Markets segment saw adjusted revenue growth of 9%, with recurring revenue growth of 6% [21][22] - Non-recurring revenue in Capital Markets advanced 47%, driven by strong license renewals [21][22] Market Data and Key Metrics Changes - The company signed several new marquee engagements across various sectors, indicating strong demand for core solutions [8][9] - The digital solutions segment gained traction, with a Midwest community bank selecting the Digital One product [10] - The company expanded its relationship with a multinational engineering firm, enhancing its Office of the CFO capabilities [11] Company Strategy and Development Direction - The strategic acquisition of the Issuer Solutions business and the sale of the Worldpay stake are aimed at strengthening the company's financial profile and value proposition [6][14][15] - The company is focused on driving commercial excellence and simplifying its portfolio to deliver consistent financial results [6][7] - The acquisition is expected to be accretive to adjusted EPS and enhance recurring revenue streams [15][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline and noted no negative impacts from macro factors on client spending [32][33] - The company reaffirmed its full-year outlook, anticipating continued strength in recurring revenue growth [8][24] - Management highlighted strong visibility into cost reduction initiatives and margin improvement for the second half of the year [81][84] Other Important Information - The company is targeting adjusted revenue growth of 4.2% to 5% for Q2 2025, with banking revenue growth projected at 3.7% to 4.4% [24][26] - The company expects to achieve a total shareholder return of 11% to 13% for the year [26] Q&A Session Summary Question: Feedback on client decision-making pipeline and Issuer Solutions business - Management reported positive feedback on client conversions and an increasing pipeline, indicating strong demand for services [31][32] Question: Insights on Capital Markets Q2 guidance - Management noted that the first quarter had a high non-recurring benefit, and the second quarter guidance reflects a return to normalized levels [40][41] Question: Banking segment performance and drivers for acceleration - Management emphasized strong visibility into banking revenue growth driven by high retention rates and a strong sales year in 2024 [88][90] Question: Free cash flow and net working capital optimization - Management highlighted significant improvements in cash flow driven by net working capital initiatives and procurement strategies [97][98] Question: Potential dis-synergies from Worldpay sale - Management confirmed there are no dis-synergies from the Worldpay business as all impacts were accounted for during the separation [108] Question: ACV growth in Q1 - Management indicated strong growth in ACV across the business, consistent with historical trends [113][114]

Core Insights - Moretus Investments L.P. focuses on identifying deeply undervalued businesses trading significantly below their intrinsic value [1] - The firm has a disciplined, fundamentals-driven investment approach that has historically produced exceptional returns, exemplified by an early recommendation of Carvana at $5, which yielded a 50x return within two years [1] - The Chief Investment Officer's background includes experience as a Private Client Advisor at Saxo Bank and working on the equity desk at Bloomberg, which has refined the investment approach at Moretus [1] Company Strategy - Moretus Investments aims to share practical, actionable insights for long-term investors seeking compelling value opportunities amidst market fluctuations [1] - The investment philosophy emphasizes constructing robust, tailored portfolios for high-net-worth individuals, leveraging insights from successful asset managers [1]

Group 1 - Capital One Financial (NYSE: COF) shares have increased by 25% over the past year, driven by better-than-expected credit costs and positive sentiment regarding its acquisition of Discover (DFS) [1] - The stock has recovered most of its previous losses, indicating strong market performance [1] Group 2 - The article reflects a contrarian investment approach, focusing on macro views and stock-specific turnaround stories to achieve significant returns with a favorable risk/reward profile [1]

Core Insights - Capital One's first-quarter 2025 adjusted earnings per share were $4.06, exceeding the Zacks Consensus Estimate of $3.66 and reflecting a 26% increase from the prior-year quarter [1] - Total net revenues for the quarter grew 6% year over year to $10 billion, although it slightly missed the Zacks Consensus Estimate of $10.03 billion [1] Financial Performance - The primary drivers for Capital One's strong performance included an improvement in net interest income (NII) and robust card spending during the latter part of the quarter, along with a decline in provisions [2] - Quarterly NII reached $8.01 billion, a 7% year-over-year increase, driven by a 4% growth in the credit card loan portfolio to $157.2 billion and a decrease in funding costs [4] - Non-interest income rose 4% to $2 billion, primarily due to increased card spending [7] Consumer Behavior - Consumer spending in the U.S. surged late in the first quarter, particularly in sectors like automobiles and electronics, as consumers rushed to make purchases ahead of potential tariffs [5] - Capital One's credit card purchase volume increased by 5% year over year to $157.9 billion, with auto loan originations surging 22% to $9.21 billion [5][6] Provisions and Expenses - The provision for credit losses decreased by 12% year over year to $2.37 billion, reflecting a favorable trend in credit quality [8] - Non-interest expenses increased by 15% to $5.9 billion, influenced by integration charges related to Discover Financial and legal reserves, while adjusted expenses rose 10% to $5.59 billion when excluding these costs [9] Acquisition Impact - The Federal Reserve and the Office of the Comptroller of the Currency approved Capital One's acquisition of Discover Financial, expected to close on May 18, which is anticipated to significantly reshape the credit card industry [10] Net Income - Capital One's net income available to common shareholders improved to $1.33 billion or $3.46 per share, up from $1.2 billion or $3.14 per share in the prior-year quarter [11]

Core Viewpoint - Capital One reported better-than-expected first-quarter 2025 results, with adjusted earnings of $4.06 per share, exceeding the Zacks Consensus Estimate of $3.66 and up from $3.21 in the prior-year quarter [1][3] Financial Performance - Total net revenues for the quarter were $10 billion, a 6% increase year over year, although it fell short of the Zacks Consensus Estimate of $10.03 billion [6] - Net interest income (NII) rose 7% year over year to $8.01 billion, with a net interest margin (NIM) expansion of 24 basis points to 6.93% [6] - Non-interest income grew 4% to $2 billion, driven by higher service charges and net interchange fees [7] - Non-interest expenses increased 15% year over year to $5.9 billion, primarily due to rising costs across almost all components [7] - The efficiency ratio deteriorated to 59.02%, up from 54.64% in the year-ago quarter, indicating reduced profitability [8] Credit Quality - Provision for credit losses was $2.37 billion, down 12% from the prior-year quarter, with a 30-plus-day-performing delinquency rate falling to 3.29% [9] - The net charge-off rate increased by 7 basis points to 3.40%, while the allowance as a percentage of reported loans held for investment rose to 4.91% [9] Capital and Profitability Ratios - As of March 31, 2025, the Tier 1 risk-based capital ratio improved to 14.9% from 14.4% a year ago, and the common equity Tier 1 capital ratio rose to 13.6% from 13.1% [10] - Return on average assets increased to 1.14% from 1.08%, and return on average common equity improved to 9.23% from 9.03% [10] Share Repurchase Activity - During the reported quarter, Capital One repurchased 0.74 million shares for $150 million [11] Strategic Acquisitions - The Federal Reserve and the Office of the Comptroller of the Currency approved Capital One's acquisition of Discover Financial, expected to close on May 18, 2025 [4] - The merger is anticipated to create a leading consumer banking and payments platform, enhancing competition and value for customers and merchants [5] Industry Outlook - Capital One's strategic acquisitions and demand for consumer loans position it well for long-term growth, although elevated expenses and weak asset quality present challenges [12]

Capital One Financial (COF) Q1 2025 Earnings Call April 22, 2025 05:00 PM ET Company Participants Jeff Norris - Senior Vice President, Global FinanceAndrew Young - CFORichard Fairbank - Chairman and CEORyan Nash - Managing Director - Regional Banks & Consumer FinanceSanjay Sakhrani - Managing DirectorDonald Fandetti - Managing DirectorJohn Hecht - Managing DirectorBrian Foran - Managing Director Conference Call Participants Terry Ma - Senior Equity Research AnalystMoshe Orenbuch - Managing Director & Senior ...

| Metric | Q1 2025 | Analysts' Estimate | Q1 2024 | Change (YOY) | | --- | --- | --- | --- | --- | | Adjusted EPS | $4.06 | $3.64 | $3.13 | 30% | | Revenue | $10 billion | $10.06 billion | $9.4 billion | 6% | | Net income | $1.4 billion | N/A | $1.3 billion | 7.7% | | Net interest margin | 6.93% | N/A | 6.69% | 24 bps | Business Overview Capital One Financial is a leading U.S. financial corporation, renowned for its credit card, consumer, and commercial banking services. Its success relies heavily on the pe ...

Financial Data and Key Metrics Changes - In Q1 2025, Capital One earned $1.4 billion, or $3.45 per diluted common share, with adjusted earnings per share at $4.06 after accounting for legal reserve activities and integration expenses [9][10] - Revenue declined by 2% from the previous quarter, primarily due to two fewer days in the quarter, while non-interest expenses decreased by 5% on an adjusted basis [11][12] - The provision for credit losses was $2.4 billion, a decrease of $273 million compared to the prior quarter, driven by lower net charge-offs and a larger reserve release [11][12] Business Line Data and Key Metrics Changes - Domestic card business saw a year-over-year purchase volume growth of 5%, with ending loan balances increasing by $6.4 billion, or about 4% year over year [22][23] - Consumer banking segment reported a 5% increase in ending loan balances, with auto originations up 22% from the prior year quarter [28][30] - Commercial banking revenue decreased by 7% from the linked quarter, with ending deposits down about 5% [31] Market Data and Key Metrics Changes - Total liquidity reserves increased to $131 billion, with cash position ending at approximately $49 billion, up $5 billion from the prior quarter [16] - The net interest margin for Q1 was 6.93%, a decrease of 10 basis points from the previous quarter, but an increase of 24 basis points year-over-year [18] Company Strategy and Development Direction - The company is focused on the acquisition of Discover, expecting to achieve estimated synergies within 24 months post-transaction [34][35] - Capital One aims to build a digital-first national bank, leveraging technology transformation and aggressive pricing strategies to attract customers [99][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. consumer, citing stable unemployment rates and improving credit metrics [46][49] - The company is closely monitoring economic indicators and consumer spending trends, particularly in light of potential tariff impacts [60][61] Other Important Information - The company released $368 million in allowance this quarter, bringing the allowance balance to $15.9 billion, with a total portfolio coverage ratio of 4.91% [12][13] - Marketing expenses increased by 19% year-over-year, reflecting ongoing investments in customer growth and premium offerings [25][26] Q&A Session Summary Question: Concerns regarding tariffs and consumer state - Management noted that the U.S. consumer remains strong, with improving credit metrics and stable debt servicing burdens [46][49] Question: Timing for achieving synergies from the Discover acquisition - Management indicated that the timeline for achieving synergies would shift slightly due to the later closing date of the acquisition [70] Question: Marketing investment opportunities and risk management - Management highlighted three areas of marketing investment: customer growth, targeting heavy spenders, and building a national bank, while remaining vigilant about risks in the subprime market [78][90] Question: Technology integration between Capital One and Discover - Management expressed confidence in leveraging Capital One's technology transformation to modernize Discover's systems, although it may take several years [114][120] Question: Recession resiliency and strategic levers - Management emphasized that the business model is designed for resilience, with rigorous underwriting practices and stress testing to prepare for economic downturns [140]

[Consolidated Results](index=2&type=section&id=Capital%20One%20Financial%20Corporation%20Consolidated%20Results) This section details Capital One Financial Corporation's consolidated financial performance and key metrics [Financial Summary—Consolidated](index=2&type=section&id=Table%201%3A%20Financial%20Summary%E2%80%94Consolidated) 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](index=4&type=section&id=Table%202%3A%20Selected%20Metrics%E2%80%94Consolidated) 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](index=5&type=section&id=Table%203%3A%20Consolidated%20Statements%20of%20Income) 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](index=7&type=section&id=Table%204%3A%20Consolidated%20Balance%20Sheets) 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)](index=9&type=section&id=Table%205%3A%20Notes%20to%20Financial%20Summary%2C%20Selected%20Metrics%20and%20Consolidated%20Financial%20Statements%20%28Tables%201%E2%80%944%29) 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](index=11&type=chunk) - 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](index=11&type=chunk) - Capital ratios for Q1 2025 are preliminary and subject to change[11](index=11&type=chunk) [Average Balances, Net Interest Income and Net Interest Margin](index=10&type=section&id=Table%206%3A%20Average%20Balances%2C%20Net%20Interest%20Income%20and%20Net%20Interest%20Margin) 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](index=11&type=section&id=Table%207%3A%20Loan%20Information%20and%20Performance%20Statistics) 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](index=13&type=section&id=Table%208%3A%20Allowance%20for%20Credit%20Losses%20and%20Reserve%20for%20Unfunded%20Lending%20Commitments%20Activity) 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](index=14&type=section&id=Business%20Segment%20Results) 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](index=14&type=section&id=Table%209%3A%20Financial%20Summary%E2%80%94Business%20Segment%20Results) 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](index=16&type=chunk) - Consumer Banking: **-9%** (from $205 million in Q4 2024 to $186 million in Q1 2025)[16](index=16&type=chunk) - Commercial Banking: **-50%** (from $388 million in Q4 2024 to $195 million in Q1 2025)[16](index=16&type=chunk) [Financial & Statistical Summary—Credit Card Business](index=15&type=section&id=Table%2010%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Credit%20Card%20Business) 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](index=17&type=section&id=Table%2011%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Consumer%20Banking%20Business) 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](index=18&type=section&id=Table%2012%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Commercial%20Banking%20Business) 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](index=19&type=section&id=Table%2013%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Other%20and%20Total) 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](index=20&type=section&id=Other) 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)](index=20&type=section&id=Table%2014%3A%20Notes%20to%20Net%20Interest%20Margin%2C%20Loan%2C%20Allowance%20and%20Business%20Segment%20Disclosures%20%28Tables%206%E2%80%9413%29) 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](index=24&type=chunk) - 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](index=24&type=chunk) - Non-interest expense in Q1 2025 includes **$110 million** in Discover integration expenses, following **$140 million** in Q4 2024[24](index=24&type=chunk) - Criticized exposures correspond to 'Special Mention,' 'Substandard,' and 'Doubtful' asset categories as defined by bank regulatory authorities[24](index=24&type=chunk) [Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures](index=21&type=section&id=Table%2015%3A%20Calculation%20of%20Regulatory%20Capital%20Measures%20and%20Reconciliation%20of%20Non-GAAP%20Measures) 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](index=21&type=section&id=Regulatory%20Capital%20Metrics) 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](index=33&type=chunk) [Reconciliation of Non-GAAP Measures](index=22&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) 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 |