COF - Earnings call transcript Q3 2024 | Capital One Financial Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Capital One Q3 2024 Earnings Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jeff Norris, Senior Vice President of Finance.

Jeff Norris

Thanks very much, Josh, and welcome, everyone. follow the the usual to Internet, website capitalone.com over the to Capital live there. at on from call please and webcasting Internet and as access One's We're links the log on

In addition the have XXXX a included quarter release summarizing third financials, our we presentation results. the to press and

presentation. Officer; Officer. today Young, this Capital Andrew are Capital Rich With you Mr. Andrew Richard me walk One's Chairman Chief Financial and Fairbank, Mr. and and will Chief Executive One's through

access in click go Investors, and To presentation to Capital earnings then Financials please of press release, quarterly the the on on One's on then release. website, click click

the future could Please and in revise section materially a quarterly One date does forward-looking in to events and SEC. titled materials statements. as Capital more note our of financial see Information or actual section with on forward-looking release in contain update earnings accessible these reports obligation our factors Factors Capital information, the or contained And performance information materials. this result may the statements. whether any of One's the this cause of that Information forward-looking dates Numerous those and described regarding at and differ factors, filed in from indicated speak Forward-looking not the presentation to as the only please particular and results Risk website the any presentation. otherwise. information, or of for Capital annual statements One's any new undertake discussion today's

to Mr. turn I'll over Now call the

Andrew? Young.

Andrew Young

and the adjusting in X small special common third downward $X.XX to Slide FDIC assessment the start $X.X per Included costs estimate. for In were diluted revision a Discover items afternoon, quarter, presentation. the results billion Thanks, everyone. earned and to integration good will tonight's or on our related I Capital share. quarter One of

credit by the operating X% third these quarter Pre-provision adjusting down Walmart second charge-offs. driven earnings quarter. expense third $XX both The the the in billion partnership, second prior absence the share increased Noninterest for decline decrease was to were relative expense decrease the linked in income. the ratio $X.X quarter, by and $X.X quarter driven losses Provision in in net billion. X%, marketing billion of a spend. a was and quarter quarterly termination Revenue quarter X%, build the earnings interest from the $X.XX. higher quarter's driven in card Net in in allowance by the increased of $X.X primarily net the coverage increases to items, of for million per increased onetime

$XXX will quarter, Turning now stands to -- in in and greater at leased this detail Slide X, our I allowance million allowance billion. the balance cover $XX.X allowance

in X.XX%. X. decrease this and banking total points by Our allowance decreased driven was basis releases allowance coverage segments. X coverage to the The segment ratio cover ratio quarter's coverage ratio in of our and the largely card consumer drivers changes I'll allowance on and Slide by portfolio in

XX basis $XX Domestic to allowance, which points we Card million coverage by In our of X.XX%. released business, decreased

and allowance, outlook slightly Banking Consumer trends In of we in our credit grown, at million, performance remaining our $XX Our has $XX segment, by point X.XX%. stability release banking confidence released a allowance And allowance. auto ratio. essentially The our commercial our to was in release by the has business. increasing XX our recoveries as coverage million finally, in the improved and flat driven coverage in decrease modest underlying driving strong credit resulting in ratio increased a basis credit resulting

increased liquidity reserves billion. about discuss in the to I'll X. billion now approximately Page Turning $X Total quarter to liquidity. $XXX

strong the deposit prior at position from by continued about $X quarter the driven billion growth. approximately billion, Our up ended $XX primarily cash quarter,

Our coverage quarter. quarter during ratio third preliminary XXX%, liquidity from in up average second the was the XXX%

X. I'll our margin. Page to interest net cover Turning

was basis The quarter and sequential result factors. NIM margin was X X.XX%, increase third XX in than higher quarter. net points the largely higher than interest last points the ago Our quarter of year basis XX

auto First, we yields. had higher card and

a As by sharing points NIM total yield relative a with the sharing basis impact XX year full basis quarter-over-quarter removal card XX ago quarter. the The Walmart. reminder, of of termination increased the benefited the the quarter revenue revenue from and points company agreement to of and

X was had quarter. And loans there we the additional the mix finally, third card Second, day of a higher sheet. in on balance

by to position. our discussing end capital X. Turning I Slide will

ratio capital than Tier XX of points the XX.X%, impact X offset the quarter dividends, by of loan in income basis at $XXX quarter. and Our partially Higher common repurchases. ended share net the higher million growth quarter equity prior the was

approval reminder, to Therefore, Discover until the Federal a announcement the acquisition continue change. be a subject the As constitute process pre-approval concluded. business has merger to of of we of our actions material the capital Reserve's

to call I over the With that, Rich? turn Rich. will

Richard Fairbank

purchase quarter, the of quarter Thank was you, card on loan strong XX volume Slide shows Ending which balances growth credit billion or our results stable margins largely Domestic another business $X.X and are XX. third line Slide year-over-year. function quarter Credit credit. segment results X% a our In evening, in domestic Andrew, good third our quarter Card X%. are of for about top results delivered card shown and growth, Card increased trends, everyone. business. Year-over-year the and

third XX basis effect quarter Walmart agreement the loans driven loans. drove revenue and up full XX.X%. increased sharing was points the volume growth by year-over-year The the margin for quarter and year-over-year increase. quarter the a revenue increased of of XX point basis XX% Revenue X%, end about purchase to in Average

charge-off full the the rate margin XX loss have basis would rate impact, Walmart quarter points. quarterly X.XX%. charge-off The of for the increased been by Excluding XX.X%. about revenue of end this sharing impact The agreement the the was quarter

basis year-over-year. prior year. The XX XX-plus delinquency points for points XX Excluding been basis charge-off rate was this end the X.XX%, quarter impact, the quarter rate from have would at X.XX%, up the up

As the a of loss did delinquency impact not Walmart have the meaningful sharing agreement a end rate. on the reminder,

the rate rate in steadily and third quarter in and sequential The for the pace the shrink been of a quarters delinquency year-over-year the to quarter. the several charge-off continued consistent was expectations. seasonal On increases charge-off have both the XX-plus Walmart delinquency basis was excluding points, points, with are impact, rate, XX down sequential rate XX trends and basis up basis, both quarter declining

XXXX quarter Total was Card XX% Domestic the marketing expense. $X.X compared was of up marketing quarter noninterest up driven higher expense by to in XX% expense the company billion, third year-over-year. primarily

company driver Our choices are total of marketing. in Domestic biggest the Card

in compelling We continue opportunities Card growth to see business. our Domestic

deliver top across compared business to Domestic XXXX. Capital marketing travel and quarter and airport One third growth Domestic like grow the to continues media marketing market, shopping. Card account marketing quarter lounges new the Card higher our originations the the Our of in the experiences spend increased increased strong investment differentiated at to included of customer in

XX Consumer Slide in results shows year-over-year quarter Banking third the originations third Auto business. quarter. our XX% were in up

and were the X%. loans down average up performance, ending the both past of made the and in quarter, X%. consumer Banking On essentially lean basis, choices a average ending flat loans a year to credit and year-over-year, about loans over opportunities years Compared to were current up we've is loans ago X%. stable puts of deposits average were both linked-quarter couple the were result into origination Consumer Our which in ending marketplace. strong us position

by was largely was X.XX%, the and for of charge-offs to down quarter Noninterest quarter was pull largely tighten revenue by The the result was Banking XX rate back X% continued X% third investments XX-plus XXXX, auto X up been points increased our year-over-year, originations. the deposit choice Consumer prior of the higher year-over-year. quarter. points about driven year-over-year, in the credit charge-off XXXX, up costs X.XX%, and delinquency down for driven stable. about strong rate auto to to quarter and largely The year auto have compared basis expense compared basis as technology

Slide X% of deposits declines results to choices about balances in quarter XX deposits loan down Banking third X%. modest the XXXX X%. Compared quarter. Average Average about from made were the to and our ending about tighten the shows were credit. up were are for loans largely linked X%, we decreased linked Ending down the result about quarter Commercial business.

down less attractive commercial deposit balances. to selected manage continue We

Third loan the third sequential compared for linked by The quarter loan up basis quarter the to X%. performing rate was X noninterest charge-off criticized linked from increased banking from basis quarter. basis increased net criticized rate was X.XX%. X% about was commercial expense X rate X.XX%. and annualized quarter points points XX The up non-performing to The quarter down X.XX%, commercial banking the the to points

and of stable. in saw in remained revenue. to continued We top In business, quarter. the Domestic auto quarter. loans, growth purchase the Card consumer for volume and results quarter line year-over-year post third closing, trends delivered credit in strong the we consecutive In growth originations we third another

of operating XX.X%. efficiency year-to-date through was Our net ratio September adjustments

We had to of to to down posted ratio XX.X% annual guided efficiency compared adjustments XXXX the operating XXXX. modestly be in net we

of and Our October. the sharing related Walmart impact the in end from view assumed take rule the fee the revenue positive included late the partnership to CFPB would effect

adjustments annual forward, ratio Looking net ]. XXs full in operating the year expect efficiency to XXXX the [ of low now we be

that And to the We roughly technology we that in invest fourth litigation. we patterns in given be quarter industry continue be operating implemented expense quarter sequential with CFPB late expect no our historical fee longer will a around in will are uncertainty line ongoing increase transformation. XXXX, assuming in the as rule in

XXXX has marketing view Our of not changed.

get originations the and marketing across into to lean consumer banking, Domestic In and In our digital-first to franchise. our our grow to grow continue franchise. to into in leaning we we're further traction marketing products banking Card national to business, We channels. continue strengthen

second total higher half we the than the typically levels in XXXX company to much quarter. to the fourth that see first be marketing in continue includes higher saw half, We we in similar last meaningfully year, the the and pattern to that expect marketing of

through closely that Separately, release the accounting mentioned week continue to parallel continue approval for press comments the way And working card their to with to with turning applications regarding misclassification call to their last acquisition. as SEC work in in their matter. resolve process. We're approach they work regulatory earnings on regulators their their Discover Discover and the the our

We we early shareholder well position as shareholder subject to up, our in to wraps to year. be a in remain and expect we that most regulatory positioned to vote, get schedule the shareholder and complete likely regulatory next proxy to expect early soon mail and action and to process As XXXX, approvals, a joint approval.

create and Pulling the than create merchants It customers. offers million a consumer value platform enhance singular It Discover of with XXX and significant acquisition franchise global brands will capabilities, powerful payments modern unique the delivers way banking customers. a results compelling to more and competition opportunity. technology, potential is up, for a and and of financial

And now your happy Jeff? be answer questions. to we'll

Jeff Norris

Thank you, Rich.

We Q&A now will the start Instructions]. session. [Operator

Operator

Josh, our with the from Nash Sachs. Q&A. question Instructions]. And [Operator first please start comes Ryan Goldman

Ryan Nash

everyone. afternoon, good Hey,

just on Rich, credit. So maybe start

can obviously parts have solid seem market, with lots subprime, be to -- different And high-end the credit you You see the parts results. prime, what of of you bucking guys consumer auto. private label, different consumer, really of trend

So others I some aren't. think

can what follow-up. And maybe have in maybe think main talk about So you're for a these means across some what consumer I seeing your cohorts? classes. in losses some it you do could of of be you where just asset different

Richard Fairbank

you, Ryan. Thank Okay.

about So let the consumer. talk first just and up pull of health me just the

market signs overall terms. a strength. have U.S. the strength of unemployment rate we renewed revision up and saw saw shown remains labor significant last are in I rate. softening job upward relative the of the points And of this, ] remains data a think first growing consumer Incomes a the recent on We strong. economy. month, in application source [ and bit. the But real picked the half XXXX, of Think actually most in about savings the unemployment

consumers to measure lifeline. delayed to way, were measure stable are the the some XXXX XXXX, have of average levels We relative unprecedented account inflation pockets some to vulnerability consumers of effects balances remember off a and avoided that happened that burdens who but pre-pandemic period. from years, even cumulative We rates. bank should millions interest servicing pandemic. edge before under that pandemic been of and than seeing to the is debt related of But consumers see sort would Consumer XXXX, But and won't higher calling before they these fully and be able the have elevated still it thanks out we able them, to defaulting will charged stimulus saying, of we for certainly inevitably that. circumstances along the their in And that really normal underlying forbearance. happen. got are we on for we've it think almost be and And won't thing charge-offs remains. We pressure

So today from that seeing I believe historically charge-offs. up low catching that period is what we're some of

good of will persist delayed from until the So most essentially do but say on period to cycle think this consumers pockets of I'd be, I rates. benchmarks, some elevated whole for that will of are there historical an there shape are we in this fully work inflation through pressure course, effect interest unmeasurable that charge-off of the time think, And pandemic. I and compared

of So a sort on that's comment, consumer Ryan, the generally.

another had said question. You you

Of take One's But individual credit you want hear Capital where why don't I can to get well. course, into I as this?

Ryan Nash

and them. you on but would Capital can it One, I'll specifically, another both Andrew, question throw handle can And you if of for guys maybe Yes. be comment helpful

historically beat Fed of of just broken changing just net big I'm you curious X, out can drivers of we've dynamics, you balance the easing. range? in about talk And this the sheet that a given begun sort the -- just think was do margin for from or on And there obviously, sheet has but you've margin. the Andrew, and X X the expectations balance maybe the here? interest operated given kind if So range,

Andrew Young

is as in Ryan. headwind, what I of this have see asset-sensitive. forces term, led we're the I the disclosures, think of near our can enumerated in outside the likely increase quarter. near effects, driving modest Yes, NIM that in the term Look, seasonal But to as we X which, the you about

else And last will be NIM pace the to the tailwind, a balance that the call that rest we term. also tailwind over so in to have card immediate relative of But a X of and and growth all I'll that bit few you've on pressure the the potential put NIM, it, quarters. seen sheet, is equal of

growth, of being, few the a and our to seen tailwinds. balance there's quarters, of highlighted rest think headwinds the the guide levels equal. good a that's were to The are particularly a where that I few card cash we've And in they steepening above term, beyond eventually current to strong yield will Longer we next even else us, tailwind out. our curve, see past again, likely we also settle the I've if sheet. relative think of all

always, light suppression factors. a in from possibility then there's lower of deposit a seeing. side, of could question a betas strong the a here, a credit, of be levels of and some least, stays especially the of for period they a on We headwind growth if the elevated, cash we're headwind. potential And could there's think where it or go depending could On so of I reason, bit that some maintain slower And host time, of the revenue right? wildcard little there's path be at

step of to and third quarter. seen here a up taking all quarters factors one overall, you've kind few over the the last But prior say, I would account the of this into those stability in

tailwinds headwinds And kind I you. let you of the of out just so that for and laid all weigh I'll

Richard Fairbank

the So talk about generally consumer. Ryan, I

bit is, Let about because what course, specifically me and the One-specific some talk about a I Capital we just of this Capital little said partly things see, of well. as what One and consumer

also It's and settled card it's in the our normal our seasonality settled out credit has delinquencies charge-offs levels. it that clear out. So business, and pre-pandemic with clear above are now, card consistent that

there's sort X of And this. for main reasons

in mirror pandemic of inventory. still a rearview we low and First, in historically charge-off recoveries compared result lower before to relatively have charge-offs the our therefore, the as

recovery below the levels, just pre-pandemic better of the to a before It's than but the rising. levels. stable, pre-pandemic rate returning pandemic, fact, anything, toward heading remains dollar per been has if inventory it's our bit but So charge-offs in

over So this effect diminish few will expect. would the next quarters, we

creating Secondly, debt burden. not with affordability inflation pace some of higher for whose cumulative have effects consumers, servicing incomes inflation and are have higher particularly the rates those pressures with kept interest or

factor. a think we So that's

your the a end or distribution lower the the highest seen prime credit And speaking, the to of burdens market, the customers why whether would settling we out subprime. measured growth the still end And by at point of charge-off that I'm tend then, not point, factor to income XXXX skew pre-pandemic with charge-offs the making through. the point are and relative about other since that debt delayed servicing to course, out stronger effect income more score, than levels as of generally above we is think low is actually we've playing

we vintages think data an an Capital here, the not trends. I you're a when really origination a running pandemic some effect, of cases, in just just point a credit pre-pandemic higher industry vintages -- then than because industry probably pandemic. seeing move have for isn't are One and this level that's at could second. And that inflated that I during One this what of that but throw is Capital because If point probably see because industry post differently from I some industry earlier should credit is One point, in mentioned scores in mentioned the Ryan, Capital you risk

Capital might One, great the the inflation going these credit particularly, related is during some we things anticipated pandemic, on we scores. At to of effects the unusual say and what of

underwriting 'XX the we where was and I risk. kept around saw we've best edges. when where seen. pockets continued the way a in So just XXXX normalized, back credit along What was rising And we ever tightened to we as saying of our we make trimming the credit

our do offset. be to think of showing recent on running now levels able has time, worsening really marketplace But pre-pandemic there the risk that elsewhere choices underlying long I similar some were is at for for up some Capital performance that in One been which may of a are the So result relatively originations vintages. stable our to

our strong leaning that point, question we business. an the are the as by about I important we auto the driven I'll up, that in, the where in about at for can through are, credit period. we've you some we that. And of very feel pandemic reason choices way can but pulling feel results, originations and in good So we wait on and made it's our another are terms stable, post-pandemic see, and talk maybe

Operator

question comes KBW. Sakhrani Sanjay with next from Our

Sanjay Sakhrani

the should Just -- that I following do the mean mentioned, with I Is were the the seasonality. expect about? that up quarter be you was And to moving point? than start credit, along still see you improvement at Rich, at better stabilized of last we quarter the had it's some on seasonality. talking or to some delinquency sorry. it before, improvements guess, than seasonality just related do to stuff Or you better credit,

Richard Fairbank

course, point, that recall let we a don't say time. just that Well, to I be expected long at some credit better of me can than saying be But seasonality. no,

of number we saying what think we a long is last over I normalizing. have for time, months, been say the credit

for absolute on normalizing, very it knows which normalize, who We will signs are until get the lookout early we it credit there. exactly should, the actually where of

And ago, year a of starting end stabilizing. lower interestingly of that the we're signs we than credit the in so pointing to see way more back out market, the

to Of strong of down that all be second derivative course, ski went effect. and that slope we continues a

case related down seasonality some that in another mentioned I for Sanjay, patterns thing from things, fact, this that headed all you basis. on of a that. have we put stabilizing. I the just about say moment watching are on that. of credit the one question, are I talk potential going credit these quarter last seasonality to not point, declared comment all to to here. that compare to patterns It's to the down think At marker you important because like want kind seasonality, seasonality, is monthly we go really about I'd we seize potential that we a benchmark in a which are through the in change But and can, a credit though, other think that And on and

So let's about works. talk for seasonality a moment how

to fact, in than have pronounced tends average. more Our industry patterns the seasonal portfolio,

delinquencies seasonal lag for relative tends The quarter high in seasonal lowest fourth point. quarter losses second to losses third first seasonally be the tend the point quarter. tends the be the the and Card to be highest the low and in to quarter to the delinquencies,

through which in of seasonal lower in delinquencies we drive and to tax seasonal March the time seasonal these delinquent and in February, time have do April, flows period, Now in lower significant that always payments recoveries. refunds a trends. are August, our charge-offs September a driver May refunds funds Tax a thought then in tax frame. And drive still to large the also uptick improvement

withholding and fraud-related later refunds the few changed was rules And seen. because paying to IRS average a tax ago, fewer that lower refunds before they of leading certain Now refund years than payments. tax the had issues

was So that due we so this, credit noise were to the were patterns much in watching to pandemic what changed. unsure payment all there data we seasonality the but extent had

the first the credit year, declare and lower That that, wanted and this that more expect. of underlying away to quarter. worse make sort we later as fact, flagged performance by in that and this to top in more affecting credit see what because weren't our half of seasonally that tax likely the that flagged numbers can So the we was effect these looked settles metrics go second patterns. to explaining near-term in of muting we effect you didn't out, combined see it we combined mountain credit sure the would out, But we usual highest than delaying seasonal refunds improvement we settled want we the the

at and at the that old quarter sense, now been this, And confirmatory. would is patterns. experience seasonal in we're, better see than the the muted seasonal has on to effect. side in had increases that coming several a that now the of delinquencies other quarters And also, We in we we've in that third look time, credit more believed

side. So side the better we've worst seen and both the

with in XX% refund really the effect think real than XXXX fewer I terms. about pull total pandemic and we refunds and can lower be before declare volume up seems happening. of out paid to settled sort this really

that surprisingly, So and way predominantly is effect, become seasonality, tax refunds we it. less in pulling as which that seasonality refunds basically what we're we're by up believe, has not amplitude fact, an of to tax is seeing driven seeing has, less

sort we we that's definitely think trend. observe that we've we the So now seasonality at of when adjusted that see think an I and look new year, the last done

By the this even on all but way, an the way. side, and in auto happens of auto more concentrated faster seasonality,

share I think think that wanted is here. confirmation you. to So here, what been I with I really declaring settling just that we've that, out that credit Sanjay, But there's really just such a is

Sanjay Sakhrani

question rate. on later. looking my team the follow-up Maybe levels I the that one. be the in you Andrew for We're to reserve well path we the tag well as and as XXXX. you above Maybe would were question can for And were What's credit guess normalization?

Richard Fairbank

So Andrew. why start, I don't

how So a the card after is credit pleased we're really, normalization. settled with really quite out period of

out. number want So point that out looking a credit, of future guidance just play ahead, on forces not I while we're to giving

so So the but strongly the believe course, one of charge-offs. there, phenomenon delayed is is of we is force, that thing the we it measure can't

sense, inventory that delayed I above sense out charge-offs there want could area you could the still all time. happen. area see that below the that flag in curve area you curve under of don't look and a the effect. sort of quite conceptually, can one of we be now, a compare at to that a over at look bit will curve of if If believe happen, kind in the the But all to just the didn't that the of, area it play

it's time. going think will moderate some But with effect that point. I think I for be to some at us

losses the here, of I that some for a is rebuild, inventory higher I economy all just those source being at rate, think, work continues inflation, recoveries course, debt then pressure But forces burdens. are should high card the time, moderating tailwind But those be some guy with be a gradual think as for interest servicing factor are plays be equal, to that our good and at else tails Another to credit probably will going credit. a the especially And out a of still too. of to Sanjay. and consumers, the factor the over is

Andrew Young

And to allowing then obviously, be respect for with allowance, we'll growth. Sanjay,

are dollar the that's I point on you on coverage. So starting more basis. focused a suspect

let me coverage in So talk terms.

First, and a have term, high just fourth seasonally balances, of reminder, as the coverage have payments. quarter, just levels balances near because of the lower higher and very typically expected tactically we those

I that else but on equal, the put and all stress that So fourth quarter. point, coverage would downward pressure in

But think question, I in longer-term a view. hearing your looking for you're

first, estimates. our confidence So our time by primarily and in forecast to coverage the is be going driven loss those over

in and ratio down projected that, bring allowance ourselves future modest to uncertainties quarters losses kind And so be coverage Rich as lower just allowance through if things that forecasts. in coverage only forecast than those losses flow those plays more projections. to of through find are be might the But those But it's ultimately when in the important and where the become comes we out our we current what lower driving relative the shared will we that we'll looking incorporate I loss then think for the how note to if projected the related forecast, see eventually, certain. declines quarter's and it theoretically as would that uncertainties even

And that variety would a be scenario pace of factors. depend down timing on the obviously direction of would that and the so in

assumption, rough that you important mentioned X, as to coverage a end day through-the-cycle with note for Because using agreement it's Sanjay, as other call-out, X just in reminder, day I'll the a was X sharing Walmart. guess CECL day one embedded CECL proxy I CECL loss the

want last agreement, that the that actually you're like effect, more you that percent we coverage Walmart recognized that sense as termination about the with roughly the roughly that of gives excluding of so basis And point XX to of X day make a is allowance X.X% Hopefully, direction CECL to I though sure impact thinking X%. quarter. just travel. the

Operator

Our Ma comes Terry from next Barclays. with question

Terry Ma

going forward? the auto is seeing the still you're to looks environment You prices. you're originations touch of positive and car you're growth called on to going positive. competitive business loan and used and have wanted know turn ask what X quarters been of out how like in growth last about I mindful I kind the thinking

expect we should more in growth auto So measured going forward?

Richard Fairbank

So yes, thank Terry. you,

auto the Our they've And last as in our early quarters. we had I as prior X been originations, XXXX, calls, in guess, stated you growing now. we in XXXX say, and it's on very our and back our performance And on remains book values vehicle anticipated back strong. even the been as declining, risk have and book both the pull our originations. credit front

headwinds factors, the high about both high down their these as the values So now facing some prices remain vehicle with and has interest industry down additionally, just interest of talking industry higher come although rates levels. are than started from have been that pre-pandemic easing are and peak, vehicle to of the some rates

So have very and book interest we're -- margins to interest and grow important, on our our in on increased also a seeing credit stabilized, resilient opportunities margins front way. has

to infrastructure, as with So areas by our very lean well we our deep decisioning relationships underwriting into that as that and sophisticated is and dealer technology our data-driven strategy network. like, our is supported

the way, we good feel business. to about are auto a well we in very disciplined and we positioned ahead, business, our particularly what looking think targeting is So we grow resilient feel

Operator

open. comes Bill now question from Bill, is Research with next your Securities. line Wolfe Carcache Our

Bill Carcache

as to it tailwind suppression up your more of Following some Andrew, to would on the overwhelm earlier of you by NIM arguably serve to or NIM NIM in that the trend if begin response? normal seasonality from commentary, a reasonable revenue in that headwinds continues would your potentially here? expect described credit Is line

Andrew Young

coming extent Outside seasonality, that. in loss sense, qualifier the is absolute to an important But rates. with yes, highly is that is Bill, an correlated suppression of which down credit to

period a see. over we of that's So expect to would time, what

Bill Carcache

behind conclude to at to this -- quarter's being that would sorry, quarters, credit continue then gradually another release you, seems, improve that On conditions you preventing commentary And us to or reserves. reserve support please you reserve reserve qualitative like your the peak prior for also in likely this expect it losses to it Andrew. the peak correct point rates likely I'm releasing here me point? suggests from consumer follow-up being if where Is and of it effect from fair it overlays wrong, seems had

Andrew Young

look factors factors It's allowance forecast because and about and that's but one in of economic think the important, overall. just albeit the component qualitative at the the hard isolation, Bill, totality to of about thinking the we

stability was the credit and release our in the trends quarter by So confidence those of driven really, just trends. underlying this

really the So quarter's that's release. to driver this that led

Operator

Our next question comes Fargo. Don with Wells from Fandetti

Donald Fandetti

you Rich, whether that. the regulators get not against just approval. still helps DOJ guess like owning arguments feel deal resonating I sense are network feel to validate in on Discover your position I suit Visa I'm or and do regulatory on the merger, a like with you with mean does closing. have the your confidence trying a you

Richard Fairbank

that a the So deal is in player doing usually is the And at the certain in part sense But there another things. of those position in industry that I looking industry. an here very this a is think aspects. of unusual X unusual player a consideration certainly, part is

is acquisition important that an such don't part network, buying a we is one this have. all, of of First something

that even So part of we're the not business. in

then on X% that getting the secondly, acquisition, we a to amount in the of recent is. is is gone it acquiring, for down credit card example, course, of industry a for an in position buying an are from scrutiny And that side has how X% tremendous But it share network concentrated years.

a care sense. that certainly this has in that obviously that strong is to certainly, case lot competitive a they are a making we regulator shown marketplace that And that very in that competition we believe about so pro

also that Of side, the on believe well. very much is course, we credit deal as card pro-competitive the

Operator

from comes Jefferies. Hecht Our question next John with

You proceed. may

John Hecht

them and wondering careful economy. And more if color business consumers little and on heard being volumes. the We've spend reacting the or how I'm trends, opinion can responsible to is on some give sort with their a asked us I'm guys answered. of that business. maybe been bit spending what wondering as cautious opposed that affects weakness that your build you your of and the about have Most or concerns some to

Richard Fairbank

you. consumer spending thank past of years. a ride over a has The few wild John, had little So bit the

although a overall, and for the the per of at begun So flat spend Since resume their on months. start since spending, recent the beginning spend largely surged to plummeted just settling per to been it as second of customer it XXXX, out. has in it then this remained has up our consumers reflect customer tick has pandemic,

the accounts. the One see last for those you months. Capital then that the and in growth of in being we spend the is accounts And by on bit little really new So growth a driven few spending see tick just a up

into pre-pandemic across really of growth stable people and nondiscretionary been and and spend lately. is of discretionary mix stable spend know double-click in FICOs very And patterns, fact, line have with incomes if some have I rates the the them While has kind the wondered been have levels. in you

credit respect I And So most and the make continues of the a living. banking we the at card pretty industry the product it's think convenient have a card. we business areas. out it's banking part really And credit with in and of to and trend industry, incredibly very card tough think that, of of macro out movement spending been checks much that's and into really and really really credit multi-decade way settled course, And the when with a look is be only to the important overall cash the spend. to striking respect a growing mechanisms of to card things

us think like for to can certainly so that marketing the and sort It's credit Thank of we focused. side, a that's spend it. few want lot first companies are companies, spend of a lot a very side choices I And a a strategy One, of think the another industry. So lean make strategies that And tailwind to I call macro the of use our what really the a help on business you, then do, I benefit to Capital metrics. our there's we be John. we what first to the on has us,

Operator

from with Bank next comes America. Our Mihir of Bhatia question

Mihir Bhatia

as ex drilling specifically was I on following about bit a portfolio. up little spending. venture about of more market it. lines if the down Maybe in been just couple It's And years. kind of John's wondering just Actually, a question the similar for you could talk just

card would how seeing in business? in overall you be that's portfolio you material just that to terms What has is grown? just encouraging in the are it much to great. it, performance invest it How more any details of additional Now

Richard Fairbank

Thank you, Mihir.

with card we continuation the in to Venture the ago top late in XXXX, year years the very momentum and in have response to and So every declaration. then started that position This And keep sort continued to with so our market just higher many launch little course, journey our market we we of brand that's that getting making the in were be the able the And far. launched to years stretch strength lean the a engagement been journey we're pleased of the win X our of is, growing. to and at market. and the customer and

So journey. Venture in X a was milestone very that important

And broadly. to also, more customers the very our enhancements to market launch of of that as was One the important at overall and top lounges our in Capital the opening experience win the travel One of as journey Capital well portal

customer also launched third with I'm X of we're we the market sure far so actually well. that card, business as response pleased year, And the Venture and you then the quarter engagement saw in last and

give Venture numbers both bit. are can far. of way very so So And be we're getting X you at market in a top I the don't to specific traction as the the lot out pleased guess our to quite products the see, we this, win a while the quest of leaning and continue -- with we on of

particular again, I win top is, to create sustained think things market going stress something to a of that want at are sometimes a the to we're of the companies requires to market comprehensive think your top say with to I one of mistakes I winning quest to want at card sort But of to unique make and really effort about to access is related that friends features. product tell what the the a to these experiences, the that about. launch

And Lounges, component premium player that course. of of the the very brand in as bull this rewards, then of credibility experience, is building a be to important marketplace. viewed a part

So that all investing of in. what is we're

amount volume, meaning the only One. which our overall marketing for quest is, quite farther but traction increase a traction would purchase up we in Capital growth I you as reach reaching getting, course, at in overall that rate seen of you is segment, an is market. break not our spend the a faster we leave well we're fair see of the data and while volume When with our the this the up. growth one that But higher but the marketplace, higher that continued the that observation up by of in You've, basically, segment, of service also top spend of the getting confirmation the in the is we're rate

Operator

ISI. question next Chase Evercore Our comes from Haynes with

John Pancari

could John in capital here ISI. that CETX impact Discover ask quarter. you how third buyback you back I know million wanted about XX.X%. your but updated ultimately bought indicated It's think buybacks still get to context? you about the the on I that wanted transaction on thoughts just $XXX Pancari, had Evercore I in ratio the to at of pace

thoughts your So I wanted there. get updated to

Andrew Young

endgame we indications, the provided high-level of forces Look, capital how around is at some devil John. the timing. there's management, the rule, the not being mention but course, Yes, play implementation uncertainty about few the details reproposal a think to first, that uncertainty impact in on the there, the

macroeconomic Second, still to we although of of have it's pending and most acquisition. be But been a there course, moderating, perhaps continues degree Discover the uncertainty. last importantly,

our the and CCAR process combined up And need these we'll of view combined of to the so capital post the assessment capital need the but and company, both Fed's combined of go through needs also close, run need. Fed's come our to view company with internal -- to we will the

$XXX to So it's so. And those are current number a and this operating reasons of a million for do believe prudent pace at the levels why been at quarters. we've we're

capital something repurchases. of XXXX SCB in we flexibility are returning a to early $X.X an saw were regime, course, had in return quarter billion like late under see appropriate, you we'll, excess act as Once we and capital, we and 'XX, we when that have at

quickly. that understand important are position, we're to value, right ourselves play to returning capital creating we ability I of forces But we find a excess shareholder now. where the why to do is were similar back have we part we the go if in an operating of so So and at

John Pancari

proposed from could How this ask late Walmart basis XX points the CFPB increase response to increase up quarter. the any fee it. was of increase there if the APR And Got that any loan the in from impact Andrew, just the to much quarter? APR full I more impact was one on the about on yield for rule?

Andrew Young

card John, of question quarter-over-quarter or take you of card year-over-year yields account on in I to When flat. the -- like your the yield of effect. quarter. it's into There's really partial when but quarter want the and to make year-over-year the thing effect Walmart. the is yield Walmart, just seasonality yield just I partial understand the sure really second comparing quarter Quarter-over-quarter, quarter Walmart of you're seasonal is effects third

Operator

comes And line our from of the final with Morgan question Adelson Stanley. Jeff

Jeffrey Adelson

to on John's up question me follow for Just one there.

with fully actions. potentially yet? offsets any mitigating this actions those I you're Have taking in any I Look, have more latest taken at approach rule, that, and you a on on update Just here. things fee thinking preparing for an been late get or you talked And point. of remain how your flux that appreciate in give us a can that mindful

be our still is taking? else the Or this about models anything that sure make here? to thinking if should approach wanted same there's we Just you're in

Richard Fairbank

Jeff. you, thank So

when point, we're industry goes late going will So litigation and not at see we're for to into that And if to predict rule waiting when this happen. the fee effect.

that a if impact the believe painstakingly that been attrition marketplace, on competition, also revenue. credit. better form, is simple pricing, on these rewarded including volumes, we've spent customer choices for it we have have building and implemented decades The behavior, the reality impact in rule franchise that industry will with believe in fewest said selection. will we we've customer better growth, fees As first with a But its before, have the an credit is and products. extremely rule We better the our the current significant

in does few and we've go you, will implemented. of what a being effect. our customer this franchise defer so go If the happens, investments and Jeff. ahead done never likely rule did we credit Relative the is time. Thank far, make customer these will only loyalty we preserves investments into the done if that we've thing really from ruling Ultimately, anticipation work over our we we anything backwards resilience -- to rule

Unknown Executive

conference concludes great that for Q&A a on night. call have joining Well, us the and Capital our continuing evening. for your this today session Thank Everybody, for in you One. interest

Operator

you for participating. Thank This today's you. call. concludes Thank conference

may You now disconnect.

Capital One Financial (COF) 24 Oct 242024 Q3 Earnings call transcript