(Bloomberg) — Capital One Financial Corp. reported a surge in third-quarter profit, beating Wall Street estimates, and the lender announced plans to repurchase as much as $16 billion of stock in the wake of its acquisition of Discover Financial Services.
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Net income surged 80% to $3.19 billion, or $4.83 a share, the McLean, Virginia-based company said Tuesday in a statement. Adjusted earnings per share totaled $5.95, topping the $4.39 average estimate of analysts surveyed by Bloomberg.
“The Discover integration continues to go well and we are well positioned to capitalize on the opportunities that lie in front of us,” Chief Executive Officer Richard Fairbank said in the statement.
Shares of Capital One rose 2.7% to $223 in extended trading at 4:20 p.m. in New York. The stock had climbed 22% this year, outperforming the 16% advance for the 24-company KBW Bank Index.
Net interest income, what the bank earns after expenses from interest-bearing assets, climbed 54% to $12.4 billion, also exceeding estimates.
Capital One’s provisions for credit losses, the amount the bank sets aside to cover loans it deems uncollectible, totaled $2.71 billion, compared with the $3.8 billion that analysts expected.
The bank’s $82 billion portfolio of consumer auto loans showed resilience during the third quarter, with a net charge-off rate of 1.54%, which was better than the 1.64% that analysts predicted.
Subprime auto lending has been a key area of focus on Wall Street following the recent collapse of Tricolor Holdings, which left some banks exposed to hundreds of millions of dollars in losses.
Earlier this year, Capital One said all debit purchase volume will be routed on the Discover network by early next year.
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