Capital One Financial Corporation (NYSE:COF.WS) Q1 2016 Earnings Conference Call - Final Transcript

Apr 26, 2016 • 05:00 pm ET

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Capital One Financial Corporation (NYSE:COF.WS) Q1 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Capital One First Quarter 2016 Earnings Conference Call. After the speakers remarks, there will be a question-and-answer period. [Operator Instructions]

Thank you. I would now like to turn the call over to Mr. Jeff Norris, Senior Vice President of Global Finance. Please go ahead, sir.

Executive
Jeff Norris

Thanks very much, Tom and welcome everyone to Capital One's first quarter 2016 earnings conference call. As usual, we are webcasting live over the Internet. To access the call on the internet, please log on to Capital One's website at capitalone.com and follow the links from there. In addition to the press release and financials, we've included a presentation summarizing our first quarter 2016 results.

With me this evening are, Mr. Richard Fairbank, Capital One's Chairman and Chief Executive Officer and Mr. Steve Crawford, Capital One's Chief Financial Officer; Rich and Steve will walk you through this presentation. To access a copy of the presentation and the press release, please go to Capital One's website, click on investors, then click on quarterly earnings release.

Please note that this presentation may contain forward-looking statements. Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion in the materials, speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information, whether as a result of new information, future events or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward-looking statements.

And for more information on these factors, please see the section titled forward-looking information in the earnings release presentation and the risk factors section in our annual and quarterly reports which are accessible at the Capital One website and filed with the SEC.

And with that, I'll turn the call over to Mr. Crawford. Steve?

Executive
Stephen Crawford

Thanks Jeff, I'll begin tonight with slide 3. Capital One earned $1 billion or $1.84 per share in the first quarter. Pre-provision earnings increased 10% from the fourth quarter to $3 billion, as we add higher revenues and lower marketing and operating expenses. Provision for credit losses increased link quarter driven by higher charge-offs and a $286 million allowance bill including $73 million of allowance billed in our oil and gas portfolio.

As you can see on slide 4, reported NIM decreased 4 basis points from the fourth quarter to 6.75%, driven by one last day to recognize income and a full quarter of lower yielding GE commercial assets, partially offset by higher interest rates. NIM increased 18 basis points year-over-year fueled by strong growth in our domestic card business.

Turning to slide 5, are common equity Tier-1 Capital ratio on a Basel III standardized basis was 11.1%, which reflects current phase end on a standardized fully phased in basis, it was 10.9%. We reduced our net share count by 12.8 million shares in the quarter as we completed our previously announced incremental $300 million in repurchases in the first quarter. We are