Analyst Note| Michael Miller |
Narrow-moat-rated Capital One reported weaker-than-expected first-quarter results as higher-than-anticipated credit provisioning and net interest margin contraction compressed the bank's bottom line. Net revenue increased 8.9% year over year, but was down 1.5% sequentially, to $8.9 billion. Earnings per share decreased 59% year over year, and 24% quarter over quarter, to $2.31, which translates to a return on tangible equity of 10.15%. The decrease in earnings was primarily due to higher credit provisioning as the bank built up $1.1 billion in reserves.