To access the live webcast of the call, please go to the investor section of Capital One's website at capitalone.com. A copy of the earnings presentation, press release, and financial supplement can also be found in the investor section of Capital One's website, capitalone.com, by selecting Financials and then Quarterly Earnings Release. Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information, whether as a result of new information, future events, or otherwise.
In the fourth quarter, Capital One earned $2.1 billion, or $3.26 per diluted common share. For the full year, Capital One earned $2.5 billion, or $4.03 per share. Net of the home loan sales and the other adjusting items, fourth quarter earnings per share were $3.86. Relative to the prior quarter, fourth quarter revenue increased about 1%, and non-interest expense increased 13%.
Our provision for credit losses was $4.1 billion in the quarter, an increase of about $1.4 billion relative to the third quarter. The increase was driven by an allowance build of $302 million in the quarter versus last quarter's release, as well as a $360 million increase in net charge-off. Our total portfolio coverage ratio decreased five basis points and now stands at 5.16%. I'll cover the drivers of the changes in allowance and coverage ratio by segment on slide five.
| Metric | Period | Current guidance |
|---|---|---|
| CET1 ratio impact from Brex | at close (Q2 2026) | Brex will take down capital by a little more than 40 basis points; total consideration ~3.5% of market cap, so it does not change the expected pace or magnitude of quarterly repurchases (new) |
| Brex earnings/tangible book impact | initial vs. over time | earnings dilutive initially as Capital One buys a business growing at multiples of industry rates; expected to lead to significant accretion over time (80% of purchase price allocated to goodwill) (new) |
| Quarterly share repurchase pace | near term | Brex not altering the approach; ~$14 billion of remaining authorization and flexibility under SCB; pace to weigh capital, growth, economy, and regulation (unchanged approach) |
| Net interest margin (seasonal) | Q1 2026 | two seasonal headwinds: about 18 basis points from two fewer days, plus higher levels of lower-yielding cash including home-loan sale proceeds that are unlikely to fully come down immediately; tax effect a wild card (seasonal pressure expected) |
| Total Discover synergies | by mid-2027 | $2.5 billion; on track, with Brex expected to have no impact on the Discover integration or synergies (unchanged) |
| Tax refunds as a credit tailwind | 2026 | higher tax refunds and lower withholdings in 2026 (from the retroactive tax bill) likely a good guy for consumer credit, but expected to be a one-time benefit that does not repeat in 2027 (new) |
| Earnings power on the other side of Discover integration | post-integration | still consistent with what was expected at the Discover deal announcement, inclusive of Brex (reaffirmed) |
| Metric | YoY | Note |
|---|---|---|
| Diluted EPS | — | Q4 earnings of $2.1 billion, or $3.26 per share ($3.86 adjusted); full-year $2.5 billion, or $4.03 ($19.61 adjusted), reflecting Discover purchase accounting and adjusting items. |
| Domestic card purchase volume | +39% | Primarily the addition of Discover purchase volume; excluding Discover, growth was about 6.2%. |
| Domestic card ending loans | +69% | Largely the addition of Discover card loans; excluding Discover, ending loans grew about 3.3%. |
| Domestic card revenue | +58% | Largely the addition of Discover revenue; excluding Discover, revenue grew about 6.2%; revenue margin steady at 17.3%. |
| Domestic card charge-off rate | -113 bps to 4.93% | Steady improvement over almost a year plus the addition of Discover; sequentially up 30 basis points in line with normal seasonality. |
| Domestic card delinquency rate | -54 bps to 3.99% | Continued improvement; sequentially up 10 basis points in line with normal seasonality, with metrics settling out. |
| Domestic card non-interest expense | +60% | A full quarter of combined operations and purchase accounting amortization; operating expense and marketing both increased. |
| Consumer banking revenue | +36% | Predominantly the full quarter of Discover operations, plus Discover revenue synergies and growth in auto loans. |
| Auto originations | +8% | Increased competitor activity drove a slowdown in originations growth. |
| Auto charge-off rate | -50 bps to 1.82% | Stable near pre-pandemic levels; sequentially up 28 basis points in line with expected seasonality. |
| Total company marketing expense | +41% to ~$1.9 billion | Addition of Discover marketing, higher media spend, and increased investment in premium benefits and differentiated customer experiences. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Brex acquisition and business payments | Not yet announced | Announced $5.15 billion stock-and-cash acquisition of Brex, a pioneer in integrated business payments/spend management; ~3.5% of market cap, expected no impact on Discover integration or synergies | New strategic move |
| Discover integration | Debit conversion underway; synergies ramping | Debit conversion to the Discover network nearly complete with network synergies showing in results; ability to originate Capital One credit cards on the network by mid-2026 and move some existing cards early 2027 | Progressing |
| Discover card growth brownout | Flagged from prior credit-policy pullbacks | Legacy Discover card loans continued to contract slightly with near-term headwinds from prior cutbacks and trimming of high-balance revolvers; growth expected to resume on the other side of the tech integration | Ongoing near-term headwind |
| Investment agenda and efficiency ratio | Upward pressure on efficiency ratio flagged | Continued lean-in across heavy spenders, national bank, network, AI, and now Brex; Brex partly offsets spending already earmarked for organic small-business build; near-term upward pressure on efficiency ratio, powered by revenue growth over time | Elevated investment |
| Consumer health and credit outlook | Resilient consumer, elevated uncertainty | Consumer and macroeconomy remain resilient with low, stable layoffs and real wage growth, but elevated uncertainty (inflation above target, slower H2 job creation, ACA premium increases); 2026 tax refunds a likely one-time credit tailwind | Resilient with caution |
| Capital return | Long-term need 11%; buyback pace picking up | $2.5 billion repurchased and dividend raised 33% to $0.80; ~$14 billion authorization remaining; Brex not altering repurchase approach | Accelerating returns |
| Regulatory and policy | — | Opposed a proposed 10% credit card rate cap (warned it would slash credit availability) and the Credit Card Competition Act, arguing interchange funds rewards and the ecosystem works well | Active advocacy |