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Capital One Stock Gains as Q3 Earnings Beat Estimates on Higher NII
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Key Takeaways
Capital One's Q3 adjusted earnings rose 12% to $6.69 per share, beating estimates.
COF's NII rose 4% to $12.89 billion, while net interest margin expanded 5 bps to 8.41%.
Capital One's NCOs fell 10%, but provisions rose 7%, while share buybacks totaled $2.6 billion.
Capital One Financial’s (COF - Free Report) third-quarter 2026 adjusted earnings of $6.69 per share significantly surpassed the Zacks Consensus Estimate of $5.45. The bottom line was up 12% from the prior-year quarter.
Results benefited from a rise in net interest income (NII) and non-interest income. Loan growth and improvement in net interest margin (NIM) were other upsides. However, higher expenses, an increase in provisions and a sequential decline in deposits were headwinds.
Results excluded acquisition-related amortization expenses and Discover Financial and Brex integration costs. Including these, net income available to common stockholders (GAAP basis) was $3.42 billion, or $5.61 per share, up from $3.09 billion, or $4.83 per share, in the year-ago quarter.
Capital One’s Revenues Increase, Expenses Rise
Total revenues jumped 6% year over year to $16.34 billion. The top line beat the Zacks Consensus Estimate of $16.11 billion.
NII was $12.89 billion, up 4% from the prior-year quarter. NIM expanded 5 basis points (bps) to 8.41%, primarily reflecting lower rates paid on retail deposits, which largely offset reduced asset yields.
Non-interest income was $3.46 billion, rising 17% year over year. This was driven by higher net discount and interchange fees and other income, partly offset by lower service charges and other customer-related fees.
Non-interest expenses were $8.86 billion, up 7%. The increase reflected higher salaries and associate benefits, occupancy and equipment costs, marketing expenses, and communications and data-processing costs.
The efficiency ratio was 54.19%, up from 53.80% in the prior-year quarter. A rise in the efficiency ratio indicates lower profitability.
As of Sept. 30, 2026, loans held for investment were $462.53 billion, up 1% from the prior quarter. Total deposits were $480.7 billion, down 1% sequentially.
COF’s Credit Quality Improves
Net charge-offs (NCOs) were $3.12 billion, falling 10% year over year. The allowance for credit losses, as a percentage of loans held for investment, was 4.92%, down 29 bps.
The 30-plus-day performing delinquency rate was 3.18%, down 21 bps year over year. The 30-plus-day delinquency rate was 3.41%, down 9 bps. The quarter included a $225-million loan reserve release, primarily driven by favorable credit performance in Domestic Card.
However, provision for credit losses was $2.92 billion, increasing 7% year over year.
COF’s Capital Ratios Decline
As of Sept. 30, 2026, the common equity Tier 1 capital ratio was 13.8%, down from 14.4% in the prior-year quarter. The Tier 1 capital ratio was 14.6%, down from 15.5% a year ago.
Capital One’s Share Repurchase Update
During the reported quarter, Capital One repurchased 12.6 million shares for $2.6 billion, bringing year-to-date repurchases to $7.9 billion.
Our Viewpoint on Capital One
Strategic expansion efforts, demand for consumer loans, favorable changes in interest rates and steady improvement in the card business are expected to support Capital One well for long-term growth. The integration of Discover is progressing, while the acquisition of Brex is expected to strengthen its credit card operations. However, elevated expenses and a tough macroeconomic backdrop are major near-term concerns.
Capital One Financial Corporation Price, Consensus and EPS Surprise
Performance and Earnings Expectations of COF’s Peers
Ally Financial’s (ALLY - Free Report) third-quarter 2026 adjusted earnings of $1.34 per share beat the Zacks Consensus Estimate of $1.32. The bottom line improved from $1.15 in the year-ago quarter.
Results benefited from growth in net financing revenues, stable other revenues and lower expenses. However, a rise in provisions acted as an undermining factor.
Navient (NAVI - Free Report) is scheduled to announce quarterly numbers on Nov. 4.
In the past seven days, the Zacks Consensus Estimate for Navient’s quarterly earnings has remained unchanged at 16 cents. This indicates a 44.8% decline from the prior-year quarter.
View the Zacks #1 Rank List
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Capital One Stock Gains as Q3 Earnings Beat Estimates on Higher NII
Key Takeaways
Capital One Financial’s (COF - Free Report) third-quarter 2026 adjusted earnings of $6.69 per share significantly surpassed the Zacks Consensus Estimate of $5.45. The bottom line was up 12% from the prior-year quarter.
Results benefited from a rise in net interest income (NII) and non-interest income. Loan growth and improvement in net interest margin (NIM) were other upsides. However, higher expenses, an increase in provisions and a sequential decline in deposits were headwinds.
Results excluded acquisition-related amortization expenses and Discover Financial and Brex integration costs. Including these, net income available to common stockholders (GAAP basis) was $3.42 billion, or $5.61 per share, up from $3.09 billion, or $4.83 per share, in the year-ago quarter.
Capital One’s Revenues Increase, Expenses Rise
Total revenues jumped 6% year over year to $16.34 billion. The top line beat the Zacks Consensus Estimate of $16.11 billion.
NII was $12.89 billion, up 4% from the prior-year quarter. NIM expanded 5 basis points (bps) to 8.41%, primarily reflecting lower rates paid on retail deposits, which largely offset reduced asset yields.
Non-interest income was $3.46 billion, rising 17% year over year. This was driven by higher net discount and interchange fees and other income, partly offset by lower service charges and other customer-related fees.
Non-interest expenses were $8.86 billion, up 7%. The increase reflected higher salaries and associate benefits, occupancy and equipment costs, marketing expenses, and communications and data-processing costs.
The efficiency ratio was 54.19%, up from 53.80% in the prior-year quarter. A rise in the efficiency ratio indicates lower profitability.
As of Sept. 30, 2026, loans held for investment were $462.53 billion, up 1% from the prior quarter. Total deposits were $480.7 billion, down 1% sequentially.
COF’s Credit Quality Improves
Net charge-offs (NCOs) were $3.12 billion, falling 10% year over year. The allowance for credit losses, as a percentage of loans held for investment, was 4.92%, down 29 bps.
The 30-plus-day performing delinquency rate was 3.18%, down 21 bps year over year. The 30-plus-day delinquency rate was 3.41%, down 9 bps. The quarter included a $225-million loan reserve release, primarily driven by favorable credit performance in Domestic Card.
However, provision for credit losses was $2.92 billion, increasing 7% year over year.
COF’s Capital Ratios Decline
As of Sept. 30, 2026, the common equity Tier 1 capital ratio was 13.8%, down from 14.4% in the prior-year quarter. The Tier 1 capital ratio was 14.6%, down from 15.5% a year ago.
Capital One’s Share Repurchase Update
During the reported quarter, Capital One repurchased 12.6 million shares for $2.6 billion, bringing year-to-date repurchases to $7.9 billion.
Our Viewpoint on Capital One
Strategic expansion efforts, demand for consumer loans, favorable changes in interest rates and steady improvement in the card business are expected to support Capital One well for long-term growth. The integration of Discover is progressing, while the acquisition of Brex is expected to strengthen its credit card operations. However, elevated expenses and a tough macroeconomic backdrop are major near-term concerns.
Capital One Financial Corporation Price, Consensus and EPS Surprise
Capital One Financial Corporation price-consensus-eps-surprise-chart | Capital One Financial Corporation Quote
Currently, Capital One carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance and Earnings Expectations of COF’s Peers
Ally Financial’s (ALLY - Free Report) third-quarter 2026 adjusted earnings of $1.34 per share beat the Zacks Consensus Estimate of $1.32. The bottom line improved from $1.15 in the year-ago quarter.
Results benefited from growth in net financing revenues, stable other revenues and lower expenses. However, a rise in provisions acted as an undermining factor.
Navient (NAVI - Free Report) is scheduled to announce quarterly numbers on Nov. 4.
In the past seven days, the Zacks Consensus Estimate for Navient’s quarterly earnings has remained unchanged at 16 cents. This indicates a 44.8% decline from the prior-year quarter.