Capital One Smashes Q2 Profit Expectations, Stock Gains 4%

Capital One Financial (NYSE:COF) shares rose more than 4% after-hours on Tuesday after the company reported second-quarter adjusted earnings that handily beat Wall Street estimates, even as it recorded a headline net loss tied to its recent acquisition of Discover Financial.

Adjusted earnings per share came in at $5.48, far exceeding the $4.03 expected by analysts. On a GAAP basis, however, the company reported a net loss of $4.3 billion, or $8.58 per share, primarily due to an $8.77 billion allowance build for Discover’s non-PCD loans following the completion of the $35.3 billion all-stock merger in May.

Revenue rose 25% sequentially to $12.5 billion, just shy of the $12.72 billion consensus estimate. The Discover acquisition significantly boosted Capital One’s scale, making it the largest U.S. credit card issuer by balances.

Period-end loans surged 36% to $439.3 billion, with credit card balances up 72% to $269.7 billion. Deposits rose 27% to $468.1 billion, further strengthening the bank’s liquidity position.

The results highlight strong core profitability and growing scale, despite near-term accounting impacts from the Discover integration.