Capital One Financial Corporation (NYSE:COF) Q1 2019 Earnings Conference Call - Preliminary Transcript

Apr 25, 2019 • 05:00 pm ET

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Capital One Financial Corporation (NYSE:COF) Q1 2019 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Welcome to the Capital One First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. 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 Finance. Sir, you may begin.

Executive
Jeff Norris

Thanks very much, Leanne, and welcome everybody to Capital One's first quarter 2019 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 2019 results. With me today are Mr. Richard Fairbank, Capital One's Chairman and Chief Executive Officer, and Mr. Scott Blackley, Capital One's Chief Financial Officer. Rich and Scott will walk you through this presentation. To access a copy of the presentation and 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 accessible at the Capital One website and filed with the SEC. Now, I'll turn the call over to Mr. Blackley. Scott?

Executive
Scott Blackley

Thanks, Jeff. I'll begin tonight with Slide 3. Capital One earned $1.4 billion or $2.86 per share in the first quarter. Net of adjusting items earnings per share were $2.90. The only adjusting items we had in the quarter was $25 million of launch in integration costs associated with our Walmart partnership. Slide 13 outlines the financial impacts of this adjusting item. Pre-provision GAAP earnings increased 18% on a linked quarter basis and 2% year-over-year to $3.4 billion. Revenue of $7.1 billion was 1% higher than Q4 '18 and 3% higher than a year ago. Relative to the prior quarter non-interest expense was down 11%, largely from a lack of Q4 seasonal spending. Compared to the prior year, non-interest expense was higher by 3% driven by increased marketing spend as operating expenses remained flat.

Provision for credit losses increased 3% on a linked quarter basis driven by an allowance build in the quarter. Charge-offs were relatively flat as there were a modestly offsetting seasonal changes in our auto and domestic card businesses. On a year-over-year, basis provision cost were higher by 1%, driven by a larger allowance