- Key insight: Capital One managed to buoy its bottom-line growth by managing down expenses and credit costs.
- Supporting data: The company's net income rose 2% from the prior quarter, despite revenue dropping 2%.
- What's at stake: Capital One is working to swallow its acquisition of Discover Financial Services last year, as well as its purchase of Brex, which closed earlier this month.
Capital One Financial's top line has gotten off to a slow start in 2026, despite two acquisitions the company made in the last year to boost its consumer and commercial businesses.
In the first quarter, tepid revenue put pressure on earnings, though the McLean, Virginia- based company said Tuesday that it kept a lid on expenses and credit costs. Capital One's efforts to bring down costs helped boost its bottom line, despite a decrease in net interest income.
The bank's net revenue decreased by 2% from the prior quarter, to $15.2 billion, while net income rose 2% on a quarter-over-quarter basis, to $2.2 billion. The results were buoyed by a 9% decrease in non-interest expenses and a 2% drop in provision for credit losses.
"Our results in the first quarter reflect solid top line growth and strong credit performance," said Richard Fairbank, the company's chairman and CEO, in a press release. "The Discover integration continues to go well and we continue to build momentum from this game-changing acquisition."
Capital One has been racking up costs as it integrates its purchase of Discover Financial Services. That acquisition, which closed last year for a value of $51.8 billion, created one of the largest credit card companies in the world.
The combined company's massive growth should provide a new engine for earnings power. Capital One's $683 billion of assets are up 38% since the first quarter last year.
Despite underwhelming quarter-over-quarter expansion in the first quarter of 2026, Capital One's net income was up 55% from the same period in 2025, before the Discover acquisition closed. Revenue was up 52%.
Costs related to the Discover acquisition are slated to exceed $2.8 billion, Fairbank said last fall. In the first quarter, amortization expenses and integration expenses together totaled $892 million, bringing down diluted earnings per share by $1.08.
The bank's latest results were not entirely unexpected, but its earnings per share of $3.34 did miss the consensus analyst estimate of $3.84, per S&P Capital IQ.
John Hecht, an analyst at Jefferies, wrote in a Tuesday note that the lukewarm results were driven by seasonally softer net interest income, but that "when looking through the noise, the quarter looks good." Net interest income of $12.1 billion was down 3% from the fourth quarter of last year.
Earlier this year, Richard Fairbank said Capital One's acquisition of the payments fintech Brex would lead to some earnings dilution initially, but that the purchase should contribute "significant accretion over time."
The bank announced the $5.1 billion deal for Brex in January, and closed the transaction shortly after the first quarter ended. Capital One has said it plans to spend about $950 million on transaction-related costs, including integration and retention compensation incurred over the next three years.
While Capital One's purchase of Discover was a play for consumer business, the Brex deal marked its efforts to expand services for businesses.
"Since our founding, we set out to build a payments company at the frontier of the technology revolution," Fairbank said in January. "Acquiring Brex accelerates this journey, especially in the business payments marketplace."
Capital One's stock price is down nearly 18% year-to-date, compared with a 2.24% rise in the KBW Nasdaq Bank Index. The market had a sharply negative after-hours reaction to the bank's earnings' report, before recovering somewhat.
