Capital One Financial Corporation

Solid Q3 results; earnings boosted by allowance release & integration items - Net income $3.5B, EPS $5.61; after Discover/Brex adjusting items, adjusted EPS $6.69. - Linked-quarter: loans up ~1% (both period-end & average); deposits down ~1% (both period-end & average). - Revenue up ~3%, non-interest expense down ~2% → pre-provision earnings +10% (adjusted +9%). - Credit provision decreased $73M (-2%) to $2.9B, driven by $3.1B net charge-offs and $225M allowance release (important for interpreting “normalized” earnings).

Credit performance strong overall; allowance coverage slightly down (but coverage still healthy) - Allowance released $225M → allowance balance $22.7B; total portfolio coverage 4.92% (down 10 bps). - Domestic card: $250M release; coverage 6.86% (down 13 bps) despite geopolitical “downside economic” consideration. - Consumer banking: $41M build; coverage 2.34% (down 5 bps) driven largely by auto loan growth offset by improved vehicle value outlook. - Commercial banking: allowance broadly flat; coverage ~1.6% (down 2 bps). - Management framed improvement in cards as driven by delinquency improvement through H1, plus strong recoveries; expects delinquency to be more seasonal going forward than consistently improving.

Net interest margin strengthened; liquidity modestly down - NIM 8.41%, +40 bps vs prior quarter (drivers cited: higher domestic card yield, $13B decline in average cash, and one extra day). - Liquidity reserves ~$134B, down $10B QoQ; cash position ~$49B; investment securities market value down ~$3B. - Preliminary average LCR ~163% (regulatory-comfort level, though reserves fell sequentially).