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Capital One, a large U.S. banking and credit card company, reported its first quarterly profit of the year on Thursday after slashing its marketing expenditure.
Results shattered expectations, and the company's shares rose 8 percent in after-hours trading. Get after-hours quotes for Capital One.
Capital One has slowed the issuance of new cards and cut back on credit lines amid the credit crisis, and by many metrics, it is holding up well.
The bank did not need to raise additional capital under a government "stress test" of how it would perform if the economy weakened. Capital One was also among the first banks cleared to repay the $3.6 billion it borrowed under the Troubled Asset Relief Program.
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McLean, Virginia-based Capital One posted third-quarter net income available to common shareholders of $425.6 million, or 94 cents per share, compared to a profit of $374.1 million, or $1.00 per share, in the same quarter last year.
Analysts had on average expected earnings of 14 cents a share, according to Thomson Reuters I/B/E/S.
Managed revenue, which includes revenue from loans on its balance sheet and in securitization trusts, was $4.63 billion, up from $4.21 billion in last year's third quarter.
Marketing expenses declined to $103.7 million from $267.4 million in the same quarter last year. Cutting marketing expenses can generate profits, but analysts sometimes fear it can also result in lower revenue in future quarters.
The company once specialized in credit cards, but expanded into branch banking with the acquisitions of Hibernia, North Fork Bancorp, and Chevy Chase Bank.
Capital One shares rose in after-hours trading, following the release of results. They closed Thursday up $1.70 at $38.33 on the New York Stock Exchange.
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