Capital One Financial NYSE: COF reported second-quarter 2026 earnings of $3 billion, or $4.73 per diluted common share, as management said the company continued to generate top-line growth while advancing its Discover integration and adding Brex to its domestic card business.
Chief Financial Officer Andrew Young said results included several adjusting items tied to the Discover and Brex acquisitions. Excluding those items, Capital One earned $5.81 per share. Revenue rose 4% from the first quarter, while non-interest expense increased 7%, producing 1% growth in pre-provision earnings. On an adjusted basis, pre-provision earnings were flat quarter over quarter.
The company’s provision for credit losses declined $1.1 billion, or 27%, from the prior quarter to $3 billion. Young said the provision reflected $3.7 billion of net charge-offs and a $662 million allowance release, bringing the allowance balance to $23 billion. Capital One’s total portfolio coverage ratio fell 26 basis points to 5.02%.
Card Business Posts Growth, Credit Improves
Chairman and Chief Executive Officer Richard Fairbank said Capital One’s domestic card business delivered “another quarter of top-line growth and strong credit results.” He noted that year-over-year comparisons now include Discover in period-end balances, while items such as purchase volume and revenue still reflect partial-quarter impacts from the acquisition.
Domestic card purchase volume rose 26% year over year, primarily due to the addition of partial-quarter Discover volume. Fairbank said legacy Capital One purchase volume growth modestly accelerated, with additional tailwinds from Brex and a small legacy corporate card business that was moved from commercial banking into domestic card. Legacy Discover purchase volume grew just under 2%, while purchase volume for legacy Capital One businesses, including Brex and corporate card, rose about 14%.
Ending domestic card loan balances increased 2.6% year over year. Legacy Discover card loans declined 1.5%, which Fairbank said was in line with management’s expectations for a temporary “brownout” in Discover loan growth. Excluding Discover, ending loans rose about 5.3%.
Domestic card revenue increased 30% from the second quarter of 2025, largely reflecting the addition of Discover revenue. Excluding Discover, revenue rose 9.5%, driven mainly by organic growth in legacy Capital One purchase volume and loans. The domestic card charge-off rate was 4.71%, down 39 basis points from the first quarter and 54 basis points from a year earlier. The delinquency rate was 3.39%, down 31 basis points sequentially and 21 basis points year over year.
Discover Integration Remains on Track
Fairbank said Capital One is 14 months into its planned 24-month Discover integration and that the process is “going well.” He said the company completed the conversion of Capital One debit customers to the Discover Network, and second-quarter results included the full quarterly run-rate debit revenue synergies from that milestone.
The company has realized about one-third of the quarterly run rate of announced operating expense synergies, Fairbank said, and remains on track to deliver the full $2.5 billion of announced synergies. In response to analyst questions, Young said operating expense synergies are more back-loaded and that Capital One remains on track to achieve the remaining operating expense synergies by the second half of 2027.
Fairbank said 50% of Discover originations are now on Capital One’s technology platform, with new originations expected to be fully on Capital One’s tech stack by the end of the third quarter. The Discover back book will move in waves, with major conversion activity beginning later in July and additional waves planned for October and January. Fairbank said the back book is expected to be fully on Capital One’s technology stack in the first quarter of next year.
Management said the Discover card loan growth brownout is temporary. Fairbank said Discover had dialed back origination programs and credit line management before the acquisition, and Capital One has made some additional trims in areas where it is less comfortable, particularly involving high-balance revolvers. He said those pullbacks have contributed to strong credit performance.
Consumer Banking, Auto and Commercial Trends
In consumer banking, Fairbank said global payment network transaction volume was approximately $190 billion in the quarter. Network transaction volume increased 156% from the partial-quarter volume recorded in the second quarter of 2025, reflecting the Discover addition and the debit conversion. Sequentially, transaction volume rose about 9%.
Auto originations increased 19% from the prior-year quarter. Consumer banking ending loan balances rose $9.2 billion, or about 11%, year over year, while average loans also increased 11%. Ending consumer deposits grew about 5% from a year earlier, and average deposits rose 19%.
Consumer banking revenue rose about 26% year over year, driven mainly by the addition of partial-quarter Discover operations, Discover revenue synergies and growth in auto loans. Non-interest expense increased about 24%, reflecting Discover, higher marketing for the national consumer banking business, increased auto originations and technology investments. The auto charge-off rate was 1.43%, up 18 basis points year over year but down 21 basis points from the first quarter.
In commercial banking, ending and average loan balances each increased about 1% from the linked quarter. Ending deposits declined about 1%, while average deposits were essentially flat. The commercial banking net charge-off rate rose 24 basis points sequentially to 0.53%. The criticized performing loan rate declined to 4.4%, and the criticized non-performing loan rate decreased to 1.32%.
Liquidity, Margin and Capital
Young said liquidity reserves ended the quarter at about $144 billion, down $21 billion from the prior quarter. Cash declined by about $22 billion to approximately $55 billion, primarily due to loan growth, wholesale funding maturities late in the quarter and the impacts from Brex. Capital One’s preliminary average liquidity coverage ratio was 165%, and its preliminary average net stable funding ratio was 136%.
Net interest margin was 8.01%, up 14 basis points from the first quarter. Young attributed nine basis points of the increase to one additional day in the quarter, with the remainder driven by a lower rate paid on retail deposits and a $5 billion decline in average cash balances.
Capital One’s common equity tier 1 capital ratio ended the quarter at 13.7%, down 70 basis points from the prior quarter. Young said $2.7 billion of share repurchases, an approximately 40-basis-point impact from the Brex transaction and an increase in risk-weighted assets more than offset quarterly net income.
Management Highlights Investment Priorities
Fairbank said Capital One continues to invest in technology, data, artificial intelligence, premium card benefits, lounges, experiences, network acceptance and the buildout of a digital-first national bank. He said the company still expects earnings power after the Discover integration to be consistent with what it expected when the deal was announced, even after acquiring Brex and bringing in-house the technology supporting Capital One Travel.
On Brex, Fairbank said Capital One is “as excited as ever” more than 100 days after closing the deal. He said Brex is beginning to see early tailwinds from Capital One’s brand, balance sheet and lead-sharing efforts, while larger benefits will require technical integration and will be unlocked over time.
Asked about the consumer backdrop, Fairbank said the U.S. consumer and economy remain resilient. He said Capital One continues to see strong delinquency trends, high payment rates, healthy spending growth and stable revolve rates across major products and segments. He added that 2024 and 2025 card originations in legacy Capital One are performing better than 2022 and 2023 originations and are “a bit below pre-pandemic levels.”
About Capital One Financial (NYSE:COF)
Capital One Financial Corporation NYSE: COF is a diversified bank holding company headquartered in McLean, Virginia. The company's core businesses include credit card lending, consumer and commercial banking, and auto finance. Capital One issues a wide range of credit card products for consumers and small businesses, and it operates deposit and digital banking services aimed at retail customers and small to midsize enterprises.
Products and services include credit and charge cards, checking and savings accounts (including the online-focused Capital One 360 platform), auto loans, and commercial lending solutions.
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