Capital One Reports $1.4 Billion Net Income and Announces Discover Acquisition

Capital One Financial Corporation reported a net income of $1.4 billion, or $3.45 per diluted share, for the first quarter of 2025, reflecting a 10% increase from the $1.3 billion, or $3.13 per diluted share, recorded in the same period of 2024. The company's total net revenue rose to $10.0 billion, a 6% increase from $9.4 billion year-over-year. This growth was primarily driven by a 7% increase in net interest income, which reached $8.0 billion, attributed to higher average loan balances in the credit card portfolio and the termination of revenue sharing provisions related to the Walmart program.

In terms of operational metrics, Capital One's loans held for investment decreased by 1% to $323.6 billion as of March 31, 2025, compared to $327.8 billion at the end of 2024. The decline was mainly due to seasonal paydowns in the credit card loan portfolio. However, average loans held for investment increased by 2% year-over-year, indicating growth in the credit card segment. The company also reported a net charge-off rate of 3.40%, up from 3.33% in the previous year, while the 30+ day delinquency rate improved to 3.51%, down from 3.98% at the end of 2024.

Strategically, Capital One is in the process of acquiring Discover Financial Services, with the merger expected to close on May 18, 2025, following the receipt of necessary regulatory approvals. The merger is anticipated to enhance Capital One's market position and operational capabilities. In the first quarter of 2025, the company incurred $110 million in integration expenses related to this transaction, contributing to a 15% increase in total non-interest expenses, which reached $5.9 billion.

As of March 31, 2025, Capital One's total assets increased to $493.6 billion, up from $490.1 billion at the end of 2024, driven by growth in cash balances and securities. The company also reported a common equity Tier 1 capital ratio of 13.6%, slightly up from 13.5% at the end of the previous year, indicating a strong capital position. The total employee headcount rose to 53,900, reflecting a 2% increase from the previous quarter, as the company continues to expand its workforce in line with its growth strategy.

Looking ahead, Capital One remains focused on integrating Discover and enhancing its digital capabilities while managing credit risk amid changing economic conditions. The company anticipates that the merger will yield significant synergies and strengthen its competitive position in the financial services market.