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(Bloomberg) -- Capital One Financial Corp., the lender set to acquire rival Discover Financial Services, posted higher first-quarter profit as consumers spent more on credit cards.
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Net income rose 10% from a year earlier to $1.4 billion, or $3.45 a share, McLean, Virginia-based Capital One said Tuesday in a statement. Adjusted earnings per share, which exclude the cost of the Discover integration and other items, totaled $4.06, beating the $3.63 average estimate of analysts surveyed by Bloomberg.
Consumer spending in the US, which accounts for the vast majority of Capital One’s card loans, got a jolt late in the first quarter as people raced to purchase cars, electronics and appliances in an attempt to get in front of President Donald Trump’s threatened tariffs. US retail sales surged 1.4% in March from the preceding month, the most in more than two years.
“The US consumer remains a source of strength in the economy,” Capital One Chief Executive Officer Richard Fairbank said in a conference call with analysts. “There appears to be a bit of a pull-forward in auto purchases, likely as consumers are trying to get ahead of tariff impacts.”
Auto loan originations climbed 22% to $9.21 billion, according to a separate presentation.
Purchase volume on the bank’s credit cards rose 5% to $157.9 billion. The net write-off rate for card loans rose 12 basis points from the preceding quarter to 6.14%, beating estimates.
Net revenue rose 6% to $10 billion, short of the $10.05 billion expected by Wall Street.
Shares of Capital One rose 3.4% to $176 in extended trading at 6:46 p.m. in New York. The stock had dropped 4.6% this year through the close of regular trading.
Bank of America Corp. CEO Brian Moynihan also said last week that retail spending has remained resilient.
“Consumers are still solidly in the game,” he told analysts. “What they’ll do next, different question, but right now they’re still solid.”
The Discover acquisition, valued at $35 billion when it was announced in early 2024, received final US regulatory approval last week. The deal, expected to be completed May 18, will make Capital One the biggest US credit-card issuer by loan volume.
Capital One’s credit-card loans outstanding totaled $157.2 billion at the end of March, a 4% increase from a year earlier. Provision for credit losses fell by $273 million to $2.4 billion, less than Wall Street’s average estimate of $2.79 billion.