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Capital One shares jump 4% after it beats profit expectations

  • EPS of $1.94 beat expectations of $1.90.
  • Revenue rose, and provision for credit losses decreased.

Capital One Financial beat expectations, reporting second-quarter profit of $1 billion, or $1.94 a share, as revenue rose 7 percent over last year, to $6.7 billion.

Analysts polled by Thomson Reuters had expected earnings of $1.90 per share, and revenue of $6.67 billion.

Shares rose more than 4 percent in after-hours trading.

The company squeezed through the Federal Reserve's stress tests this year with conditional approval to return money to shareholders after it fixes some "material weaknesses."

During the quarter, Capital One reduced its provision for credit losses 10 percent, to $1.8 billion.

But some had speculated it might face another challenge in the quarter — potentially steep write-offs of loans it made to taxi operators for their medallions. It is an issue Signature Bank dealt with in the quarter, writing down its medallion loans by 38%.

Analysts at Morgan Stanley said in a note Wednesday that Capital One could mark down its own loans 40 percent as well, which would shave 33 cents a share off second-quarter earnings. A quick scan of the press release on Thursday, after the market closed, finds no mention of medallions.