Capital One Financial Corp. (COF:US), the bank that gets more than half its revenue (COF:US) from credit cards, posted a third-quarter profit that beat analysts’ estimates as revenue from investments rose.
Net income fell 5.2 percent to $1.12 billion, or $1.86 a share, from $1.18 billion, or $2.01, a year earlier, the McLean, Virginia-based company said today in a statement. Profit from continuing operations, which excludes some items, was $1.88 a share, beating the $1.81 average estimate of 27 analysts surveyed by Bloomberg.
“One could argue that the pickup in auto lending and other consumer lending should benefit” Capital One, Oppenheimer & Co.’s Chris Kotowski and Ben Chittenden wrote in a Sept. 26 report. The sale or maturing of assets is making it hard for Capital One to grow loan balances, the analysts wrote.
Capital One, vying to counter a drop in consumer loan demand, is seeking to expand beyond its core credit-card business. It hired at least three bankers last quarter for its securities group, which arranges foreign-exchange transactions for corporate clients, offers financing for municipalities, conducts research, underwrites securities and advises energy companies. The lender also bought a commercial real estate firm to expand in multifamily home lending.
The bank, led by Chief Executive Officer Richard Fairbank, also is seeking to return more capital to investors. The lender boosted its quarterly dividend (COF:US) sixfold this year and said in July that it will buy back as much as $1 billion of stock.
Capital One fell 10 cents to $72.15 at 4 p.m. in New York. The shares have climbed 25 percent this year, compared with the 27 percent advance for the 24-company KBW Bank Index. Chittenden has an outperform rating on the stock and expects it to reach $78 within 12 months.
Retail sales in the U.S. rose 0.2 percent in August, less than forecast and the smallest gain in four months, the Commerce Department reported Sept. 13. Retail sales growth may have stalled in September for the first time since October 2012, according to the median estimate of economists.
American Express Co. (AXP:US), the biggest credit-card issuer by purchases, said yesterday that third-quarter profit rose 9.3 percent to $1.37 billion on higher worldwide card spending.
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