- Key takeaway: The Discover integration is beginning to contribute to Capital One's purchase volume, which increased 26% from a year earlier.
- Expert quote: "We continue to build momentum from the game-changing acquisition of Discover. Even though some individual variables in our deal model have moved … We still expect our earnings power on the other side of the Discover integration to be consistent with what we expected at the time we announced the deal." —Richard Fairbank, CEO of Capital One
- Supporting data: The company's net income rose to $3 billion, compared to a loss of $4.3 billion a year ago.
Capital One Financial executives on Tuesday provided updates on the company's integration of its recent acquisitions of Discover Financial Services and payments-focused fintech Brex.
Chairman and CEO Richard Fairbank said during the company's second-quarter earnings call that the Discover integration is beginning to contribute to purchase volume, which increased 26% from a year earlier. He said the integration will continue throughout the rest of the year.
"Getting Discover onto Capital One's technology will allow us to unleash our models, full-spectrum underwriting and lean vendor capabilities to power more originations, higher spend volume and, ultimately, higher loan volume over time," Fairbank said.
Fairbank also said
"We will scale into this approach more aggressively over time," Fairbank said. "Over the coming months, as we test and learn, we will start leaning in with marketing. Fully leveraging Capital One's marketing machine requires a little more technical integration. We'll have to set up data pipelines and calibrate our models for Brex's customer base."
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Capital One reported second-quarter net revenue of $15.9 billion, up 27%, while net income rose to $3 billion, driven in part by strength in its credit card business. A year ago the company posted a loss of $4.3 billion, which included a number of expenses tied to the Discover acquisition.
Consumer banking average loans increased 11% to $88.6 billion, driven almost entirely by auto lending. On the commercial banking side, average loans increased 3% to $90.9 billion. Deposits grew 5% from a year earlier, adding $21.2 billion in customer balances by quarter-end.
Total non-interest expenses increased 29% to $9 billion, with marketing expenses rising 23%. The bank's net interest margin, a measure of lending profitability, increased to 8.01%.
Fairbank said the U.S. consumer and
Fairbank said Capital One is seeing strong credit performance among its customers and healthy spending growth, highlighted by both account growth and increased spending per customer.
"None of these observations are conclusive on their own, but I think collectively they paint a picture of strength of the consumer and certainly strength within our own portfolio," Fairbank said.
In its legacy credit card business, Capital One said newer account vintages are outperforming older ones, with 2024 and 2025 originations showing stronger credit performance than accounts opened in 2022 and 2023.
"We've seen strength in our originations really throughout this whole post-pandemic period, and it's one of the things that gives us the confidence to lean into our originations and spend that money on marketing," Fairbank said.
