Buoyed by strong revenue growth in its credit card operations, Capital One Financial Corp. (COF) said Thursday that its third-quarter earnings rose 48% from the same period last year, to $1.2 billion.
Its earnings per share climbed nearly 14%, to $2.01, or 25 cents better than the estimates of analysts polled by Bloomberg.
Capital One's third-quarter revenues totaled $5.8 billion, up nearly 14% from the prior quarter and 38% from the same period last year. That compared to revenues of $4.2 billion in the third quarter of 2011, and revenues of $5.1 billion in the second quarter of this year.
Capital One attributed much of the revenue increase to the full impact of HSBC's $30 billion U.S. credit card portfolio, which was completed in the second quarter. Year-over year income and revenue growth were also aided by its acquisition of ING Direct's U.S. banking operations earlier this year.
"Capital One posted solid results across all of our businesses in the third quarter, including strong contributions from ING Direct and the HSBC U.S. credit card business," Richard Fairbank, the company's chief executive officer, said in a news release. "We are well positioned to sustain strong returns and capital generation, even in an environment with low industry growth and prolonged low interest rates."
The company's net charge-off rate was 1.75% in the third quarter, up from 1.53% in the second quarter, which the company attributed to a smaller credit mark for charge-offs on HSBC credit card loans. However, its provision for loan losses declined by nearly 40% from the prior quarter, to $1 billion, due to a lower allowance related to the HSBC card portfolio.