Capital One Net Interest Income Rises 37% to $42.9 Billion
The credit-card-focused bank expanded its net interest margin by 96 bps to 7.84% for the full year.
Net interest income for Capital One (COF) increased 37% year-over-year to $42.9 billion. The credit-card-focused bank saw its full-year net interest margin expand 96 bps to 7.84%.
Growth in the interest engine followed a significant expansion of the balance sheet. Average loans held for investment increased 25% year-over-year to $396.7 billion, while average total deposits rose 22% to $429.6 billion.
Total net revenue for the full year increased 37% year-over-year to $53.4 billion. However, non-interest expenses rose at a faster clip, increasing 42% to $30.5 billion. This spending was driven by a 29% increase in marketing and a 45% increase in operating expenses.
Operating leverage declined as a result of the spending surge. The full-year efficiency ratio increased 215 bps year-over-year to 57.08%.
Credit costs rose significantly despite a slight improvement in asset quality. The full-year provision for credit losses increased $8.9 billion year-over-year to $20.7 billion. During the same period, the full-year net charge-off rate decreased 9 bps to 3.30%.
Capital positions strengthened over the year. The Common Equity Tier 1 (CET1) capital ratio increased 80 bps year-over-year to 14.3%.
Capital return to shareholders also increased. Dividends declared and paid per common share rose 8% year-over-year to $2.60.