(Bloomberg) — Capital One Financial Corp., the biggest US credit-card lender, reported a first-quarter profit that missed Wall Street estimates and set aside more cash to cover soured loans.<\/p>\n
Most Read from Bloomberg<\/p>\n
Provision for credit losses surged 72% from 12 months earlier to $4.07 billion, the McLean, Virginia-based bank said in a statement Tuesday, almost a year after completing its acquisition of rival Discover Financial Services. Adjusted earnings per share totaled $4.42, missing the $4.56 average estimate of analysts surveyed by Bloomberg.<\/p>\n
Shares of Capital One fell 2.1% to $198.23 in extended trading at 5:36 p.m. in New York. The stock had tumbled 16% this year through the close of regular trading, the worst performance in the 24-company KBW Bank Index.<\/p>\n
The war in Iran has driven up gas prices, weighing on consumer budgets. Chime Financial Inc. disclosed earlier this month that its customers spent 25% more on fuel in March compared with the previous month.<\/p>\n
The conflict in the Middle East \u201cpresents a significant cloud on the horizon,\u201d Capital One Chief Executive Officer Rich Fairbank said during a conference call with analysts. If energy prices remain elevated, \u201cthat would be a real headwind for consumers\u201d and a drag on the US economy, he said.<\/p>\n
First-quarter net interest margin, the difference between what the bank earns on loans and what it pays for deposits, was 7.87%, less than the 8.19% average estimate of analysts.<\/p>\n
Earlier this month, Capital One completed its $5.15 billion acquisition of Brex, a financial-technology firm that specializes in corporate expense management.<\/p>\n
(Updates with Discover in second paragraph, share decline in third, CEO comments in fifth.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
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