Capital One FinancialNYSE: COF

The ultimate goal of a business is to generate cash for its shareholders. Investors often consider net income the “bottom line” of a business, indicating how much profit it makes.

On Thursday, October 31, Capital One announced that it might face action from the Consumer Financial Protection Bureau (CFPB) over the launch of a new savings account that offers a higher interest rate than its current savings accounts.

A major federal agency might take action against Capital One for supposedly making false claims about its savings accounts, as the consumer lender revealed in a report on Thursday evening.

Capital One has solid financial results, showing a net income of $1.8 billion, a low P/E ratio, and strong liquidity with $132 billion in reserves. The company is planning to buy Discover Financial Services, which could improve its operations and help establish its own payment network, although there are risks involved in merging the two companies. While credit card services account for more than 70% of its revenue, they also come with high loss rates, but the company maintains a strong liquidity position with a coverage ratio of 163%.

Investors were happy with the outcomes.

COF's results for the third quarter of 2024 exceeded expectations due to increased net interest income, loans, and deposits. However, they are still facing challenges with rising costs, provisions, and a decrease in non-interest income.

Capital One released its latest quarterly earnings on Thursday (Oct. 24), showing that cardholders are still using credit cards as a main way to pay. The CEO mentioned that consumers are in a "good shape." Additionally, the company's report highlighted that card purchase volumes increased by 5%, reaching $166 billion.

Capital One (COF) reported quarterly earnings of $4.51 per share, which is higher than the Zacks Consensus Estimate of $3.70 per share. This is also an increase compared to earnings of $4.45 per share from the same period last year.

On Thursday, Capital One announced a 1.6% rise in its profits for the third quarter, thanks to higher interest rates that allowed the consumer bank to earn more from customers paying off their credit card debts.