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0445ae340003ed95364231dcd3b735b40b0149543a38aec194a95265c526b4f6

The decline in Q4 2023 net income was primarily driven by several factors. **Capital One Financial Corporation (COF)** saw a significant increase in its **provision for credit losses**, which rose to **$2,857 million**—a 25% increase from Q3 2023 and 18% above Q4 2022. Additionally, **non-interest expenses increased by 18% to $5,717 million** due to higher marketing and operating costs, while a one-time **FDIC special assessment of $289 million** further impacted earnings. **Lower pre-provision earnings** and **higher net charge-offs** (rising to **$2,533 million** from $1,999 million in Q3 2023) also contributed to the reduced net income in Q4 2023.  **[0000927628-24-000008_ex991q42023earningsrelease.htm:0]** **[0000927628-24-000008_ex992q42023earningsrelease.htm:1]** **[0000927628-24-000008_ex992q42023earningsrelease.htm:3]** 

Why was net income so low in Q4 2023?

Capital One’s steep drop in Q4 2023 EPS was driven primarily by a **sharp decline in net income** (from **$1.8 billion** in Q3 to **$706 million** in Q4), which was further compounded by a **$289 million FDIC special assessment** that reduced diluted EPS by **$0.57**. Additionally, the increase in credit losses—with a **$573 million rise in the provision for credit losses** due to **$2.5 billion in net charge-offs** and a **$326 million loan reserve build**—along with a **29% increase in marketing expenses** and a **15% increase in operating expenses** (total non-interest expenses growing by **18%**), led to a **16% decline in pre-provision earnings** (down to **$3.8 billion**). These factors collectively drove the significant drop in earnings available to common shareholders in Q4 2023.  **[0000927628-24-000008_ex992q42023earningsrelease.htm:5]** **[0000927628-24-000008_ex991q42023earningsrelease.htm:0]** **[COF_3370908_1]** 

What drove the steep drop in EPS in Q4 2023?

The documents present contradictory information. One document reports the Q1 2024 net income as **$597 million** compared to **$960 million** in Q1 2023  **[0000927628-24-000264_cof-20240630.htm:72]** **[0000927628-23-000168_cof-20230331.htm:60]** , implying a lower net income. However, another document explains that Q1 2024 net income actually increased to **$1,280 million** from **$960 million** in Q1 2023, attributing the change to:

- **Higher net interest income** (from increased loan balances and higher asset yields) and  
- **Higher non‐interest income** (mainly driven by growth in the Credit Card business),  
- **Lower provision for credit losses** (a decrease of **$112 million**),  
- **Offsetting factors** like increased non‐interest expense (including higher marketing spend and a **$42 million FDIC special assessment**).  **[0000927628-24-000174_cof-20240331.htm:8]** **[0000927628-24-000158_ex992q12024earningsrelease.htm:1]** 

Because one set of data indicates a lower net income while the detailed explanation describes an increase, the documents do not provide definitive reasons for a lower net income in Q1 2024.

What caused the lower net income in Q1 2024?

There is conflicting information in the documents. One document states that Q1 2024 basic EPS was **1.39**  **[0000927628-24-000264_cof-20240630.htm:72]** , yet another explanation details a significant improvement in EPS to **3.14** along with the contributing factors.  **[20240425PH93746:0]**  Thus, based solely on the provided information, there is no definitive explanation for why EPS would fall to **1.39** in Q1 2024.

Why did EPS fall to 1.39 in Q1 2024?

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a1eeee28e65c36fb7e87b2343010c5a0387c7ed7c0b20a19918110bfe4e94241

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

52e6ce55d987266d5e0dab0c35191261f919fdbff07662ea910db1e5894e6f52

Cash and Cash Equivalents [USD, Millions]

PP&E [USD, Millions]

Goodwill [USD, Millions]

Shareholders' Equity [USD, Millions]

Retained Earnings [USD, Millions]

Common Stock [USD, Millions]

Additional Paid-in Capital [USD, Millions]

fc6a18f4e03071fcb112a71ea515b95d2f745e36277cb77cc860c71c89a56cad

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

284249b6ea0801fd92a610e82995f8f31cb278816664483538424eb84187962a

Purchase volume for total credit card (USD millions)

Auto loan originations (USD millions)

30+ day delinquency rate for total credit card (percentage)

Net charge-off rate for total credit card (percentage)

30+ day delinquency rate for Consumer Banking (percentage)

Nonperforming loan rate for Commercial Banking (percentage)

Allowance coverage ratio for total credit card (percentage)

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def2b562b23ea57249bf0930fb97f6d73ecf08d034be0c5a6e5cebc3b18990d9

Credit Card

- Net Interest Income

- Non-Interest Income

Consumer Banking

Commercial Banking

Other

Total Revenue

261b5131d1b322bed6692efb5dfc804cd997f2855f6777d3a7a8cd68fa5112fa

CAPITAL ONE FINANCIAL (COF)

Financials