Capital One Financial Corp. (NYSE:COF) stock rose 6.59% (As on January 25, 11:47:49 AM UTC-4, Source: Google Finance) after the company’s earnings came in at $1.16 billion compared with $2.30 billion, in last year’s fourth quarter. Year-over-year growth in purchase volume and loans, coupled with strong revenue margin drove an increase in revenue compared to the fourth quarter of 2021. In the fourth quarter, strong year-over-year growth in every top line metric continued in the domestic card business. Purchase volume for the fourth quarter was up 9% from the fourth quarter of 2021. Ending loan balances increased $22.9 billion or about 21% year over year. Ending loans grew 8% from the sequential quarter. Commercial Banking period-end loans decreased $1.2 billion, or 1 percent, to $94.7 billion. Average loans held for investment in the quarter increased $6.7 billion, or 2 percent, to $306.9 billion. Period-end total deposits increased $15.8 billion, or 5 percent, to $333.0 billion, while average deposits increased $14.6 billion, or 5 percent, to $326.6 billion. Interest-bearing deposits rate paid increased 82 basis points to 1.82 percent.
Net interest margin of 6.84 percent, an increase of 4 basis points. Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.5 percent at December 31, 2022.
Moreover, average deposits were up 4% year over year and up 3% from the sequential quarter. Consumer Banking revenue was up 10% year over year as growth in auto loans and deposits was partially offset by the year-over-year decline in auto margins. Noninterest expense was up 13% compared to the fourth quarter of 2021, driven by investments in the digital capabilities of our auto and retail banking businesses and marketing for the national digital bank.
COF in the fourth quarter of FY 22 has reported the adjusted earnings per share of $2.82, missing the analysts’ estimates for the adjusted earnings per share of $3.84, according to figures compiled by Thomson Reuters. The company had reported the adjusted revenue growth of 11.3 percent to $9.04 billion in the fourth quarter of FY 22 from $8.12 billion last year.
Moreover, in the fourth quarter, the company continued to see the effects of the choice to pull back on auto growth in response to competitive pricing dynamics that have pressured industry margins. Auto originations declined 32% year over year and 20% from the linked quarter. Driven by the decline in auto originations, Consumer Banking loan growth continued to be slower than previous quarters.