Capital One posts 1st-quarter profit as fees and interest gains offset loan provisions

Capital One profits in 1Q from fees and interest

MCLEAN, Va. — Capital One Financial Corp. on Thursday reported a first-quarter profit as income from fees and interest grew to offset slightly higher loan loss provisions.

The performance sent shares sharply higher in aftermarket activity.

The company, one of the nation’s largest credit card issuers, said Thursday it earned $636.3 million, or $1.40 per share, compared with a loss of $172.3 million, or 44 cents a share, in the same period a year ago.

Revenue rose to $4.29 billion from $2.88 billion a year ago.

Analysts surveyed by Thomson Reuters expected profit of 58 cents per share on revenue of $4.13 billion.

Shares of Capital One rose 81 cents to close at $45.55. They soared another $2.91, or 6.4 percent, to $48.46 in aftermarket trading. Shares have traded between $13.65 and $46.39 in the past year.

CEO Richard Fairbank said he believes consumer loan charge-offs peaked in the first quarter.

The company set aside $1.48 billion for loan losses, up from $1.28 billion from the same quarter a year ago.

The company saw improvement in the commercial, auto finance and retail banking businesses, offsetting a slight increase in domestic credit card charge-offs.

The 30-day delinquency rate on loans rose to 4.22 percent from 3.65 percent a year ago.

The charge-off rate was slightly higher at 6.01 percent from 4.41 percent a year ago. The rate reflects loans the company no longer expects to be paid back.

Capital One, along with other consumer banking companies, was hit with rising credit-related losses as consumers struggled to pay bills in a tough job market.