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Capital One Is Focused on Share Repurchases

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Oct. 11 2020, Updated 11:34 a.m. ET

Capital One’s plans

Capital One (COF) repurchased 5.4 million shares in 1Q15—representing 1% of the bank’s total outstanding shares. Since April last year, it repurchased 24.9 million, or 4%, of its outstanding shares.

Under the latest CCAR (Comprehensive Capital Analysis and Review), the bank got approval to increase its quarterly dividend from $0.30 to $0.40 per share and repurchase up to $3.1 billion of common stock through the end of 2Q16.

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The bank preferred to return capital to shareholders through share repurchases. The bank intends to actively work to deliver value to investors through regular capital returns. Capital One forms ~1.5% of the Financial Select Sector SPDR ETF (XLF). The above graph shows the decline in period end common shares outstanding over the last five quarters.

Various banks including Discover Financial (DFS), JPMorgan Chase (JPM), and Wells Fargo (WFC) announced share buyback plans in 1Q15.

Future outlook

For full-year 2015, Capital One expects revenue growth to be driven by growth in average loans.

The bank plans to increase its focus on marketing in its Domestic Card business to sustain its current growth. It expects higher marketing and operating expense from additional volumes to put pressure on its efficiency ratio. However, it expects the additional expense to help its long-term growth.

In 2015, Capital One expects to be in the higher end or slightly above the 53.5%–54.5% efficiency ratio range. It intends to manage costs tightly to stay within the range. However, it will be open to investing in suitable opportunities to drive long-term value.

The bank’s strategic priorities for 2015 haven’t changed. It’s focused on creating value and sustaining strong performance. It intends to maintain discipline in underwriting across businesses. Its priorities include managing costs tightly while investing to grow and meet rising regulatory requirements.

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