Capital One Stock Climbs After Hours as Q3 Profit Crushes Estimates and Card Losses Ease

Capital One, one of the country's biggest credit card lenders, posted a third-quarter profit that blew past Wall Street's forecasts after the closing bell on Tuesday, Oct. 20. Because so much of its business is credit cards, its results also offer a window into how everyday borrowers are handling their bills.

The short version: card losses eased, expenses came down and the stock rose in after-hours trading. Shares were up 6.67% at $215 shortly after the release, Benzinga reported, while Investing.com later put the gain at 4.9%, to $211.37.

How much did Capital One beat estimates?

Capital One earned an adjusted $6.69 a share in the third quarter, about 22% above the roughly $5.50 analysts expected. Revenue was about $16.34 billion, close to forecasts. Lower credit losses and lower expenses drove the beat, and the stock rose roughly 4% to 7% in after-hours trading on Tuesday, Oct. 20.

On a standard accounting basis, Capital One earned about $3.5 billion, or $5.61 a diluted share, up from $4.83 a share a year earlier, according to Investing.com. Revenue rose about 6% from a year earlier, while non-interest expenses fell 2% from the prior quarter to about $8.9 billion. Pre-provision earnings, a measure of profit before setting money aside for bad loans, rose 10% to about $7.5 billion.

The net interest margin, which measures how much more a bank earns on loans than it pays on deposits and other funding, rose 0.40 percentage point from the prior quarter to 8.41%. That margin is unusually high for a bank because credit cards carry high interest rates.