A spike in loan delinquencies ate into first-quarter profits at Capital One Financial in McLean, Va.
The $349 billion-asset company’s net income fell 22% to $752 million while its earnings per share of $1.54 came in 39 cents below the average estimates of analysts compiled by FactSet Research Systems.
The first-quarter results included a $99 million addition to refund reserves for Capital One's payment protection insurance product in the United Kingdom. Without the item, net income would have been $910 million or $1.75 per share.
Net interest income after the loan-loss provision fell 1% to $3.5 billion. The company increased its provision by 30% year over year to $1.9 billion, as the 30-day plus delinquency rate climbed 28 basis points, to 2.92%. Meanwhile, net chargeoffs rose 28% to $1.5 billion and its rate of net chargeoffs to total loans increased 42 basis points to 2.5%.
Most of the delinquencies and chargeoffs were in the bank’s credit card and auto loan portfolios. Net chargeoffs in its commercial banking portfolio equaled 0.14% of total loans.
Capital One’s fees also took a hit. Noninterest income dropped 9% to $1.06 billion on lower deposit service charges, customer-related fees and interchange fees. Noninterest expense rose 7% to $3.4 billion due to higher salaries.
Shares of Capital One fell 5.4% to $81 in after-hours trading.
Separately, Capital One said it will consolidate about 2,200 workers in Wilmington, Del., in two buildings, after the company had previously suggested it might leave the city, the News-Journal reported Monday.