Growth in its largest loan categories, coupled with higher interest rates, propelled first-quarter profit higher at Capital One Financial.

Net income at the $363 billion-asset company rose 71% to $1.3 billion from a year earlier. Earnings per share of $2.64 was 29 cents better than the mean estimate of analysts compiled by FactSet Research Systems.

Net interest income after the loan-loss provision jumped 16% to $4 billion. The provision declined 16% to $1.7 billion. Total loans held for investment increased 3% to $248 billion.

Bloomberg News

The average balance of interest-earning assets grew 4% to $330 billion and the average yield on those assets improved 41 basis points to 8.04%.

Credit cards loans held for investment increased 8% to $108 billion. Auto loans rose 10% to $55 billion. Commercial real estate loans increased 1% to $27 billion. However, commercial and industrial loans dropped 4% to $38 billion and residential mortgages declined 20% to $17 billion. Capital One announced late last year that it was exiting the mortgage business.

The McLean, Va., bank’s domestic credit card charge-off rate increased 12 basis points to 5.26%.

The investment securities portfolio grew 4% to $70 billion.

Total deposits rose 4% to $251 billion, with deposits that pay customers interest increasing 5% to $225 billion. Non-interest-bearing deposits fell 1% to $26 billion.

Noninterest income increased 12% to $1.2 billion on improvements in both interchange fees and service charges.

Noninterest expenses jumped 4% to $3.6 billion on higher salaries and employee benefits, occupancy costs and marketing.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.