Capital One Financial’s COF second-quarter 2026 adjusted earnings of $5.81 per share significantly outpaced the Zacks Consensus Estimate of $4.85. The bottom line was up from $5.48 in the prior-year quarter.
Results benefited from a rise in net interest income (NII) and non-interest income, along with a substantial decline in provisions. Loan growth and improvement in net interest margin (NIM) were other positives. However, higher expenses and a sequential decline in deposits were undermining factors.
Results excluded acquisition-related amortization expenses and Discover Financial and Brex integration costs. Including these, net income available to common stockholders (GAAP basis) was $2.94 billion or $4.73 per share against a net loss available to common stockholders of $4.34 billion or $8.58 per share in the prior-year quarter.
Capital One’s Revenues Increase, Expenses Rise
Total net revenues were $15.85 billion, rising 27% year over year. Also, the top line beat the Zacks Consensus Estimate of $15.7 billion.
NII was $12.37 billion, up 24% from the prior-year quarter. NIM expanded 39 basis points (bps) to 8.01%.
Non-interest income was $3.48 billion, jumping 39%. This was driven by higher net discount and interchange fees, service charges and other customer-related fees and other income.
Non-interest expense was $9.04 billion, up 29%. The increase reflected a rise in salaries and associate benefits, occupancy and equipment costs, marketing expenses, communications and data-processing costs, amortization of intangibles and other expenses.
The efficiency ratio was 57.05%, falling from 55.96% in the prior-year quarter. A rise in the efficiency ratio indicates lower profitability.
As of June 30, 2026, loans held for investment were $457.17 billion, up 2% from the prior quarter. Total deposits were $484.26 billion, down 1% sequentially.
COF’s Credit Quality Improves
Provision for credit losses was $2.99 billion, down 74% year over year. The allowance for credit losses, as a percentage of loans held for investment, was 5.02%, down 41 bps.
The 30-plus-day performing delinquency rate was 2.91%, down 22 bps year over year. The 30-plus-day delinquency rate was 3.13%, down 19 bps. The quarter included a $662-million loan reserve release, primarily driven by favorable credit performance in Domestic Card.
On the other hand, net charge-offs (NCOs) were $3.64 billion, rising 19% year over year.
COF’s Capital Ratios Decline
As of June 30, 2026, the common equity Tier 1 capital ratio was 13.7%, down from 14% in the prior-year quarter. The Tier 1 capital ratio was 14.8%, down from 15.1% a year ago.
Capital One’s Share Repurchase Update
During the reported quarter, Capital One repurchased 14 million shares for $2.7 billion.
Our Viewpoint on Capital One
Strategic expansion efforts, demand for consumer loans, favorable changes in interest rates and steady improvement in the card business are expected to support Capital One well for long-term growth. The integration of Discover is progressing, while the acquisition of Brex is expected to strengthen its credit card operations. However, elevated expenses and a tough macroeconomic backdrop are major near-term concerns.
Capital One Financial Corporation Price, Consensus and EPS Surprise
Capital One Financial Corporation price-consensus-eps-surprise-chart | Capital One Financial Corporation Quote
Currently, Capital One carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance and Earnings Expectations of COF’s Peers
Ally Financial’s ALLY second-quarter 2026 adjusted earnings of $1.21 per share lagged the Zacks Consensus Estimate of $1.25. However, the bottom line reflected a 22% jump from the year-ago quarter.
Results were primarily hampered by higher expenses and provisions. However, growth in net financing revenues and other revenues, an increase in loan balances and an improvement in NIM offered support to some extent.
Navient NAVI is scheduled to announce quarterly numbers on Aug. 6.
In the past seven days, the Zacks Consensus Estimate for Navient’s quarterly earnings has remained unchanged at 19 cents. This indicates a 9.5% decline from the prior-year reported number.
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This article originally published on Zacks Investment Research (zacks.com).