Correction: The consensus earnings-per-share estimate used in this story has been updated from an earlier version.
Capital One Financial in McLean, Va., rode growth in its flagship U.S. credit card business to stronger third-quarter earnings.
The firm on Thursday reported net income of $1.1 billion for the quarter, a 3% increase over the same period a year earlier. Net income per share was $1.98, which met the expectations of analysts polled by Bloomberg.
Capital One, which lends to cardholders with lower credit scores than some of its competitors, has been enjoying solid growth in its credit card business in recent quarters. Industrywide, subprime credit cards have been growing at a faster rate than prime cards.
For the quarter, Capital One’s average loans held for investment in its domestic card business rose to $80.4 billion, up 12% from the same period in 2014. Total net revenue in the U.S. credit card segment rose by 10%.
Over the same one-year period, Capital One’s provision for credit losses in the U.S. credit card business rose by 8%.
“Capital One posted solid results in the third quarter, highlighted once again by strong growth in our domestic card business,” Chief Executive Richard Fairbank said in a press release.
Other parts of Capital One’s loan portfolio grew more slowly.
In the commercial banking business, average loans held for investment rose to $51.6 billion, up 6% from the third quarter of 2014. Auto loan originations grew by 3% to $5.6 billion in the third quarter.
The results marked a rebound from the second quarter, when Capital One announced a wave of layoffs and badly missed analysts’ profit estimates.
But the most recent results were hurt by a $69 million reserve to compensate customers in the U.K. who claim they were falsely sold insurance that protects against income loss when the customer becomes ill or unemployed. That followed a $78 million reserve for the same purpose during the second quarter.