(Bloomberg) -- Capital One Financial Corp., the bank that’s seeking to acquire rival Discover Financial Services, posted a profit that beat Wall Street estimates on strength in its credit-card and auto-lending businesses.
Net income of $1.78 billion was little changed from a year earlier, McLean, Virgina-based Capital One said Thursday in a statement. The lender posted adjusted earnings per share of $4.51, beating the $3.77 average estimate of analysts in a Bloomberg survey.
Shares of Capital One rose 3.7% to $159 in extended trading at 6:27 p.m. in New York. The stock had climbed 17% this year through the close of regular trading.
Earlier this year, Capital One agreed to acquire Discover in a $35 billion deal that’s now facing regulatory scrutiny. On Wednesday, New York Attorney General Letitia James asked a court for permission to subpoena the lender as part of an ongoing antitrust probe, saying the deal would have “significant impact” on consumers in the state. US bank regulators and the Department of Justice are also reviewing the proposed transaction.
“We continue to work through the regulatory approval process, and we’re fully mobilized to plan and deliver a successful integration,” Capital One Chief Executive Officer Richard Fairbank said in the statement.
In a conference call with analysts Thursday, Fairbank said the firm expects to complete its acquisition of Riverwoods, Illinois-based Discover early next year, pending regulatory approval.
Last week, consumer lender Ally Financial Inc. reported results that showed borrowers buckling under the stress of expensive debts, which showed up in the firm’s auto-loan portfolio. Fairbank said Capital One has largely managed to avoid such consumer weakness flowing through to its earnings.
“What we see in industry data is that post-pandemic origination vintages are running at higher-risk levels than pre-pandemic vintages, probably because of inflated credit scores during the pandemic,” he said on the call. “There is some underlying worsening in the marketplace that may be showing up elsewhere, that some of our choices were able to offset.”
Other third-quarter highlights:
- Credit-card loans increased by $2.8 billion, or 2%, to $156.7 billion
- Auto loans rose by $1.1 billion, or 2%, to $75.5 billion
- Net revenue increased 5% to $10 billion
- Provision for credit losses dropped by $1.4 billion to $2.5 billion
- Net charge-offs totaled $2.6 billion
(Updates with stock gains in third paragraph, additional CEO comments starting in sixth.)
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