Last updated: April 18. 2013 5:39PM - 368 Views
Associated Press



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(AP) Capital One Financial Corp. said Thursday that its first-quarter net income tumbled 25 percent from the same period last year, when the lender booked a hefty gain from its acquisition of online bank ING Direct.


Across its segments, Capital One posted annual increases in revenue in its domestic card, consumer banking and commercial lending businesses in the January-March period. That offset a decline in its international card segment.


All told, the company's net interest income, or money earned from loans, grew 34 percent to $4.57 billion in the quarter. Non-interest income, which includes service charges and other customer-related fees, fell 35 percent to $981 million.


"Each of our businesses delivered solid results in the quarter and our balance sheet is strong," said Richard D. Fairbank, Capital One's chairman and CEO.


Capital One, based in McLean, Va., is best known for its credit card business, but it has taken steps to increase its profile as a national bank in recent years. The acquisition of ING Direct, which closed in February 2012, made Capital One the nation's sixth-biggest bank, based on deposits.


Rising home prices and stock prices that have hit records are making consumers feel wealthier and spend more. When consumers spend more, that can help boost credit card use, benefiting card issuers like Capital One.


Most analysts think the economy strengthened from January through March, helped by the pickup in hiring, a sustained housing recovery and steady consumer spending. Consumers stepped up purchases in January and February, even after Social Security payroll taxes rose this year.


Even so, employers added only 88,000 jobs in March, a sharp slowdown from average gains of 220,000 in November through February. And consumers cut back on their spending at retail stores and restaurants last month.


That didn't appear to hurt Capital One, however.


The company's net income after paying preferred dividends fell to $1.05 billion, or $1.79 per share, in the first three months of this year. Analysts polled by FactSet expected earnings of $1.61 per share.


A year ago, the company earned $1.4 billion, or $2.72 per share. When excluding the impact of the ING Direct deal, profit amounted to $1.56 per share.


Revenue jumped 13 percent to $5.55 billion, but to below analysts' prediction of $5.57 billion.


Capital One shares ended regular trading up 3 cents at $52.79. The stock added 33 cents to $53.12 in after-hours trading. Shares are down about 9 percent this year.


Associated Press
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