Capital One ’s COF fourth-quarter 2024 adjusted earnings of $3.09 per share handily surpassed the Zacks Consensus Estimate of $2.66. The bottom line also compared favorably with $2.24 in the prior-year quarter.

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Results gained from higher net interest income (NII) and non-interest income and rise in loans and deposits. Also, provisions declined during the quarter. However, the increase in expenses was the undermining factor.

Results excluded certain non-recurring items, including charges related to Discover Financial DFS integration. After considering these, net income available to common shareholders was $1.02 billion or $2.67 per share, up from $639 million or $1.67 per share in the prior-year quarter. Our estimate for the metric was $924 million.

For 2024, adjusted earnings were $13.96, beating the consensus estimate of $13.53 and rising 12% year over year. Net income available to common shareholders (GAAP) was $4.45 billion or $11.59 per share, down from $4.82 billion or $11.95 per share in 2023.

Capital One’s Revenues Improve, Expenses Rise

Total net revenues for the quarter were $10.19 billion, up 7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $10.16 billion.

For 2024, total net revenues grew 6% to $39.1 billion. The top line also outpaced the consensus estimate of $39.08 billion.

NII increased 8% year over year to $8.1 billion. NIM expanded 30 basis points (bps) to 7.03%. Our estimates for NII and NIM were $7.92 billion and 6.98%, respectively.

Non-interest income of $2.09 billion grew 5%. The rise was driven by higher service charges and other customer-related fees, and net interchange fees. Our estimate for non-interest income was $2.06 billion.

Non-interest expenses were $6.09 billion, up 7% year over year. The rise was due to an increase in almost all cost components except the amortization of intangibles cots and other expenses. We expected the metric to be $5.97 billion. Adjusted expenses were $5.87 billion, up 8%.

The efficiency ratio was 59.75%, down from 60.14% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.

As of Dec. 31, 2024, loans held for investment were $327.8 billion, up 2% from the prior-quarter end. Total deposits were $362.7 billion, rising 3%. Our estimates for loans held for investment and total deposits were $316.4 billion and $362.6 billion, respectively.

Credit Quality of COF: A Mixed Bag

Provision for credit losses was $2.64 billion in the reported quarter, down 8% from the prior-year quarter. We anticipated provisions of $2.77 billion.

The 30-plus-day-performing delinquency rate fell 2 bps year over year to 3.69%. However, the net charge-off rate jumped 38 bps to 3.59%. Allowance, as a percentage of reported loans held for investment, was 4.96%, up 19 bps year over year.