(Reuters) – Consumer lender Capital One Financial Corp’s first-quarter profit missed estimates on Thursday due to an increase in provisions that reduced gains from interest rate hikes.
The Federal Reserve’s rate hikes to tame soaring inflation since the past year benefited lenders as they charged higher interest from borrowers.
Capital One’s net interest income rose 12% to $7.19 billion in the first quarter.
Still the rate hikes left the economy reeling from higher costs of borrowing and saw banks stockpile rainy day funds to prepare for soured loans.
The Virginia-based lender said provision for credit losses swelled to $2.8 billion in the quarter ended March, up from $677 million a year ago.
Capital One shares are up 3.6% so far this year but fell 4.9% to $91.3 in extended trading on Thursday.
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Net profit more than halved to $960 million, or $2.31 a share, for the first quarter, from $2.40 billion or $5.62 a share, a year go.
Analysts on average had estimated a profit of $3.92 per share, according to data from Refinitiv.
(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Maju Samuel)