Strong Reported and Adjusted EPS
GAAP Q1 EPS $3.34; adjusted EPS (net of Discover integration and purchase accounting adjustments) $4.42.
Capital One Financial
· COF
April 21st, 2026
Summary
- Earnings Call Date:
- 2026-04-21
- Change Since:
- -1.00%
- Next Earnings Date:
- 2026-07-28
Earnings Call Sentiment
PositiveThe call presents a generally positive performance and strategic progress: solid earnings (adjusted EPS), sequential improvement in pre-provision earnings, strong liquidity and capital, good credit trends in card and auto, and successful execution on strategic integration steps (debit conversion, Brex close, travel insourcing). Offsetting items include a QoQ NIM decline driven by elevated cash and seasonality, short-term Discover-related growth headwinds, near-term elevated marketing and integration-related expenses, allowance builds in select portfolios, and a modest CET1 hit from the Brex deal. Management communicated confidence in delivering expected synergies and long-term earnings power despite near-term noise and investment-driven pressure on efficiency.
Company Guidance
Management provided detailed near‑term and integration guidance: Q1 reported $2.2B net income ($3.34 GAAP EPS, $4.42 adj.), revenue -2% QoQ, noninterest expense -9% QoQ, pre‑provision earnings +$530M (8%; +$430M adj., 6%), provision ~ $4.1B (net charge‑offs ~$3.8B, allowance build $230M) and an allowance balance of $23.6B (total coverage 5.28%, +12bps). Key business metrics: Domestic Card purchase volume +40% YoY (ex‑Discover +8%), ending card loans +69% YoY (ex‑Discover +3.9%), revenue margin 16.9%, charge‑offs 5.1% (↑17bps QoQ, ↓109bps YoY), delinquency 3.7% (↓29bps QoQ); Consumer Banking: txn volume ~$174B, auto originations +21% YoY, ending loans +10% YoY, deposits +35% YoY, revenue +37% YoY, auto charge‑offs 1.64% (delinq 4.21%); Commercial: loans +1% QoQ, annualized NCO 0.29%, criticized performing 4.99%. Liquidity and capital: liquidity reserves ~$165B, cash ~$76B (+$19B QoQ), preliminary LCR 166%, NIM 7.87% (↓39bps QoQ—2 fewer days ≈‑18bps; one extra day in Q2 ≈+9bps), CET1 14.4% (+10bps QoQ) after $2.5B of buybacks; Brex consideration ~$4.5B expected to reduce CET1 by ~40bps in Q2. Integration and outlook: debit conversion to Discover complete with revenue synergies flowing (Q2), Discover originations to be on Capital One tech by end‑Q3 and back‑book conversion by Q1’27, expense synergies more back‑loaded with total synergies target $2.5B by mid‑2027, and management reaffirmed earnings‑power (ROTCE) normalized to a 12.5% capital base remains consistent with the original deal assumptions.
Pre-Provision Earnings Increased Sequentially
Pre-provision earnings rose by ~$530 million (≈8%) sequentially; adjusted pre-provision earnings increased ~ $430 million (≈6%).
Robust Liquidity Position
Total liquidity reserves ≈ $165 billion; cash increased to ≈ $76 billion (up ~$19 billion QoQ); preliminary liquidity coverage ratio ~166%.
Strong Capital Position
Common Equity Tier 1 (CET1) ratio 14.4%, up 10 bps QoQ; $2.5 billion of share repurchases executed in the quarter.
Domestic Card Top-Line Growth and Improving Credit
Year-over-year purchase volume up 40% (includes Discover); excluding Discover +8% YoY. Ending loan balances +69% YoY (incl Discover); excluding Discover +3.9% YoY. Domestic card charge-off rate 5.1% (up 17 bps QoQ, improved 109 bps YoY). Delinquency 3.7% (down 29 bps QoQ, down 55 bps YoY).
Consumer Banking Growth
Consumer banking revenue up ~37% YoY driven largely by the Discover addition and auto growth; auto originations +21% YoY; ending consumer loans +10% YoY; ending consumer deposits +35% YoY.
Commercial Credit Performance
Commercial annualized net charge-off rate 0.29% (decreased 14 bps QoQ); ending and average loan balances roughly +1% QoQ.
Progress on Strategic Milestones and Integration
Closed Brex acquisition (~$4.5 billion consideration) and brought Capital One travel technology in-house; successful conversion of Capital One debit customers to the Discover Network; management remains on track to deliver $2.5 billion of synergies by mid-2027 with meaningful revenue synergies already beginning from debit conversion.
Operator
Good day, and thank you for standing by. Welcome to the Capital One Q1 2026 Earnings Call. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jeff Norris, Senior Vice President of Finance. Please go ahead.
Jeff Norris
Thanks very much, Josh, and welcome, everyone. To access the webcast of this call, please go to the Investors section of Capital One's website at capitalone.com. A copy of the earnings presentation, press release and financial supplement can also be found in the Investors section of Capital One's website at capitalone.com by selecting financials and then quarterly earnings release. With me this evening are Mr. Richard Fairbank, Capital One's Chairman and Chief Executive Officer; and Mr. Andrew Young, Capital One's Chief Financial Officer. Rich and Andrew will walk you through the presentation summarizing our first quarter results for 2026. Please note that this presentation may contain forward-looking statements.
Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information, whether as a result of new information, future events or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward-looking state...
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