CAPITAL ONE FINANCIAL CORP
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
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Domestic Card Business Results
Domestic Card Business
The Domestic Card business generated net income from continuing operations of $3.3 billion, $4.7 billion and $7.3 billion in 2023, 2022 and 2021, respectively. In 2023, 2022 and 2021, the Domestic Card business accounted for greater than 90% of total net revenue of our Credit Card business.
Table 8.1 summarizes the financial results for our Domestic Card business and displays selected key metrics for the periods indicated.
Table 8.1: Domestic Card Business Results
| Year Ended December 31, · Change | |||||||
|---|---|---|---|---|---|---|---|
| (Dollars in millions, except as noted) · 2023 · 2022 · 2021 · 2023 vs. 2022 · 2022 vs. 2021 | |||||||
| Selected income statement data: | |||||||
| Net interest income | $18,610 | $15,616 | $12,916 | 19% | 21% | ||
| Non-interest income | 5,672 | 5,363 | 4,532 | 6 | 18 | ||
| Total net revenue(1) | 24,282 | 20,979 | 17,448 | 16 | 20 | ||
| Provision (benefit) for credit losses | 8,268 | 4,020 | (868) | 106 | ** | ||
| Non-interest expense | 11,648 | 10,827 | 8,712 | 8 | 24 | ||
| Income from continuing operations before income taxes | 4,366 | 6,132 | 9,604 | (29) | (36) | ||
| Income tax provision | 1,030 | 1,453 | 2,266 | (29) | (36) | ||
| Income from continuing operations, net of tax | $3,336 | $4,679 | $7,338 | (29) | (36) | ||
| Selected performance metrics: | |||||||
| Average loans held for investment | $135,213 | $114,506 | $95,818 | 18 | 20 | ||
| Average yield on loans(2) | 18.46% | 16.07% | 14.49% | 239bps | 158 | bps | |
| Total net revenue margin(3) | 17.94 | 18.28 | 17.85 | (34) | 43 | ||
| Net charge-offs | $6,164 | $2,833 | $1,820 | 118% | 56% | ||
| Net charge-off rate | 4.56% | 2.47% | 1.90% | 209bps | 57 | bps | |
| Purchase volume | $605,664 | $568,752 | $487,297 | 6% | 17% | ||
| (Dollars in millions, except as noted) | December 31, 2023 | December 31, 2022 | Change | ||||
| Selected period-end data: | |||||||
| Loans held for investment | $147,666 | $131,581 | 12% | ||||
| 30+ day performing delinquency rate | 4.61% | 3.43% | 118bps | ||||
| Allowance for credit losses | $11,261 | $9,165 | 23% | ||||
| Allowance coverage ratio | 7.63% | 6.97% | 66bps | ||||
(1)We recognize finance charges and fee income on open-ended loans in accordance with the contractual provisions of the credit arrangements and charge off any uncollectible amounts. Finance charges and fees charged off as uncollectible are reflected as a reduction in total net revenue.
(2)Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(3) Total net revenue margin is calculated based on total net revenue for the period divided by average loans during the period.
** Not meaningful
Because our Domestic Card business accounts for the substantial majority of our Credit Card business, the key factors driving the results are similar to the key factors affecting our total Credit Card business. Net income for our Domestic Card business decreased in 2023 compared to 2022 primarily driven by:
Higher provision for credit losses primarily driven by loan growth and continued credit normalization.
| 66 | Capital One Financial Corporation (COF) |
Higher non-interest expense primarily driven by increased operating expenses, including salaries and associate benefits.
These drivers were partially offset by:
Higher net interest income primarily driven by higher average loan balances and margins.
Higher non-interest income primarily driven by higher net interchange fees due to an increase in purchase volume and gains on our deferred compensation plan investments.
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