Shares of Capital One (COF - Free Report) declined 1.9% in after-market trading following the release of fourth-quarter 2017 results. Adjusted earnings of $1.62 per share lagged the Zacks Consensus Estimate of $1.83. However, it compared favorably with the year-ago quarter’s earnings of $1.58.
Results benefited from a rise in revenues and easing margin pressure. Also, the quarter witnessed a rise in loan and deposit balances. However, increase in provisions and expenses were the undermining factors.
After taking into consideration charges related the tax act and other non-recurring items, net loss for the quarter was $971 million or $2.17 per share. This compared unfavorably with prior-year quarter’s net income of $791 million or $1.45 per share.
For 2017, adjusted earnings per share of $7.74 surpassed the Zacks Consensus Estimate of $7.47 and were up 7% year over year. After considering several notable one-time items, net income was $1.98 billion or $3.49 per share, down from $3.75 billion or $6.89 per share in 2016.
Revenue Growth Supports Results
Net revenues were $7.01 billion, up 7% from the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $7.12 billion.
For 2017, net revenues grew 7% year over year to $27.24 billion. However, it lagged the Zacks Consensus Estimate of $27.37 billion.
Net interest income increased 7% from the prior-year quarter to $5.81 billion. Also, net interest margin increased 18 basis points (bps) year over year to 7.03%.
Non-interest income increased 7% year over year to $1.2 billion. The increase was mainly driven by a rise in net interchange fees, partially offset by a decline in other income, and service charges and other customer-related fees.
Non-interest expenses of $3.78 billion increased 3% from the year-ago quarter. All cost components, except amortization of intangibles, occupancy and equipment, marketing and professional services, rose year over year.
