Either consumers paid down some debt or credit card lenders pulled back on lending last month. Total loans from the seven trusts were $521.4B, down 2.3% from December’s total.

The average delinquency rate in January increased to 2.81% from 2.75% in December and from 2.58% a year ago.

The average net charge-off rate of 3.53% rose from 3.27% in the prior month and dropped from 4.11% in January 2025. Bread Holdings (BFH), though, can skew the average because its net charge-off rate is significantly higher than the others. Excluding Bread, the average net charge-off rate was 2.94%, down from 3.13% in December and 3.50% in January 2025.

American Express (AXP), Synchrony Financial (SYF), Citigroup (C), and Bread Financial (BFH) saw their net charge-off rates decline month-over-month, while Capital One (COF), JPMorgan Chase (JPM), and Bank of America (BAC) saw net charge-off rates rise.

Total delinquencies for J.P. Morgan’s Trust Tracker Index rose by 5 basis points M/M to 1.28%, in line with J.P. Morgan analyst Richard Shane’s expectations. Net charge-offs for the index improved by 11 bps M/M to 1.84%, “modestly outperforming JPMe of 1.92%,” the analyst noted.

Source: SEC filings, company statements.

More on American Express, Capital One Financial, etc.

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• Synchrony Financial (SYF) Presents at UBS Financial Services Conference 2026 Transcript
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Management View

• Richard Fairbank, Founder, Chairman, CEO & President, announced the definitive agreement to acquire Brex for a combination of stock and cash totaling $5.15 billion. Fairbank explained, “Brex is a pioneer in the dynamically changing business payment space, with industry-leading technology and world-class talent. Acquiring Brex accelerates a journey we’ve been on since our founding days, the quest to build a banking and payments company that’s positioned to win where the world is going.”
• Fairbank highlighted the ongoing integration of Discover and stated that 2025 was “a seminal year for Capital One,” emphasizing the completed acquisition of Discover and the strategic opportunities it unlocks, particularly in growing and scaling the global payments network.
• Fairbank noted, “We remain on track to deliver the expected synergies” from the Discover integration and signaled that the Brex acquisition “will have no impact on the Discover integration or expected synergies.”
• Andrew Young, Chief Financial Officer, reported, “In the fourth quarter, Capital One earned $2.1 billion or $3.26 per diluted common share. For the full year, Capital One earned $2.5 billion or $4.03 per share.”
• Young also highlighted completion of the $8.8 billion Discover home loans portfolio sale, resulting in a net gain on sale of $483 million.

Outlook

• Management indicated continued investment in growth opportunities, especially in technology, AI, and the premium credit card space, which is expected to result in “some upward pressure on efficiency ratio in the near term.”
• Fairbank stated, “We still expect our earnings power on the other side of the Discover integration to be consistent with what we expected at the time we announced the Discover deal, inclusive of Brex.”
• The company plans to accelerate Brex’s growth “almost from day 1” post-close and is leaning into strategic investments that include Capital One Travel, Capital One Shopping, and Auto Navigator.

Financial Results

• Reported fourth quarter revenue increased about 1% compared to the prior quarter, with noninterest expense up 13%.
• Adjusted fourth quarter earnings per share were $3.86, and full year adjusted earnings per share were $19.61.
• The provision for credit losses was $4.1 billion, an increase of about $1.4 billion relative to the third quarter, driven by a $302 million allowance build and a $360 million increase in net charge-offs.
• The allowance balance ended at $23.4 billion, and the coverage ratio stood at 5.16%.
• Net interest margin for the quarter was 8.26%, a decline of 10 basis points from the prior quarter.
• The common equity Tier 1 capital ratio was 14.3%, about 10 basis points lower than the prior quarter after $2.5 billion in share repurchases.

Q&A

• Sanjay Sakhrani, KBW: Asked about the strategic value of Brex and the 10% credit card cap proposal. Fairbank detailed Brex’s integrated platform and cautioned that a credit card rate cap “would make credit much less available for consumers up and down the credit spectrum.”
• L. Erika Penala, UBS: Queried about the Credit Card Competition Act and global acceptance. Fairbank emphasized the importance of building international acceptance for the Discover network, stating, “It’s a long journey to build acceptance all over the world.”
• Ryan Nash, Goldman Sachs: Inquired about investment acceleration and efficiency management. Fairbank responded, “The net effect will be some upward pressure on efficiency ratio in the near term… we still expect our earnings power… to be consistent with what we expected at the time we announced the Discover deal, inclusive of Brex.”
• Terry Ma, Barclays: Asked about consumer health and loan growth brownout. Fairbank noted, “The brownout… will continue until the card integration is done,” but affirmed that “the U.S. consumer and the overall macro economy remain resilient.”
• John Pancari, Evercore: Pressed for Brex deal financials and timing. Young explained, “Given the relative size of Brex to Capital One, we don’t intend to provide additional metrics,” while Fairbank asserted that Brex and Discover integrations can proceed in parallel.
• Saul Martinez, HSBC: Sought clarity on Brex’s impact on earnings and buybacks. Fairbank confirmed, “Brex will result in earnings dilution initially as we’re buying a business with a growth rate that is multiples of industry growth rates,” and Young stated, “The Brex transaction itself will take down our capital by, I think, a little more than 40 basis points… but certainly not enough to influence our thinking about near-term repurchases.”

Sentiment Analysis

• Analyst tone was probing and cautious, especially around the Brex acquisition, efficiency outlook, and regulatory risks, with repeated questions on financial impacts, capital returns, and strategic integration.
• Management maintained a confident and assertive tone, frequently emphasizing strategic alignment and long-term value, though occasionally acknowledged near-term dilution and expense pressure. Fairbank repeatedly used phrases such as “we are leaning into them” and “we still expect our earnings power” to reinforce confidence.
• Compared to the previous quarter, analyst questions remained focused on growth investments and integration, but showed increased skepticism around incremental acquisitions and capital deployment. Management’s tone was similarly confident, but with more direct acknowledgment of near-term headwinds.

Quarter-over-Quarter Comparison

• The fourth quarter introduced the Brex acquisition, a major development not present in the previous quarter, alongside continued focus on Discover integration.
• Adjusted earnings per share declined from $5.95 in Q3 to $3.86 in Q4.
• Provision for credit losses rose by $1.4 billion quarter-over-quarter, reversing the prior quarter’s allowance release.
• Marketing and noninterest expenses accelerated, reflecting heightened investment activity compared to Q3.
• Management reiterated its long-term earnings outlook, while analysts intensified their scrutiny of capital allocation and the impact of new deals.

Risks and Concerns

• Management cited competitive intensity, temporary loan growth headwinds in the Discover portfolio, and ongoing regulatory risks such as proposed credit card rate caps and the Credit Card Competition Act.
• Analysts raised concerns about earnings dilution from the Brex acquisition and near-term efficiency ratio pressure.
• Fairbank addressed these by emphasizing the temporary nature of certain headwinds and the company’s disciplined investment approach.

Final Takeaway

Capital One signaled its commitment to strategic growth through the Brex acquisition, ongoing Discover integration, and investments in technology and premium customer segments. Management acknowledged near-term expense and efficiency pressure, but emphasized the enduring earnings power and long-term value creation expected from these initiatives, underscoring a disciplined approach to capital deployment and an optimistic outlook for future synergies and market expansion.

Read the full Earnings Call Transcript

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The company also announced that it agreed to acquire fintech Brex for $5.15B.

Q4 adjusted EPS of $3.86, trailing the average analyst estimate of $4.14, fell from $5.95 in Q3 and $3.09 in Q4 2024.

During the quarter, Capital One (COF) recorded:

• A $509M intangible amortization expense on Discover,
• $352M of Discover integration expenses,
• $37M Discover loan and deposit fair value mark amortization, and
• Legal reserve of $117M
• Those are partly offset by a $483M gain on the sale of its home loan portfolio and
• The reversal of $29M on its FDIC special assessment.

That brought its Q4 GAAP EPS to $3.26, down from $4.83 in Q3 and up from $2.67 in Q4 2024.

Total revenue of $15.6B, beating the $15.5B consensus, increased from $15.4B in the prior quarter and $10.2B a year ago.

Net interest income of $12.5B, exceeding the Visible Alpha consensus of $12.4B, climbed from $12.4B in Q3 and $8.10B in Q4 2024. Its net interest margin of 8.26% narrowed from 8.36% in the previous quarter and grew from 7.03% a year ago. The Y/Y increase reflects its Discover acquisition. Adjusted net interest margin of 8.28% narrowed from 8.43% in the prior quarter and widened from 7.03% a year ago.

Q4 preprovision earnings of $6.24B, missing the Visible Alpha estimate of $6.80B, declined from $7.10B in Q3 and increased from $4.10B in the prior year’s Q4.

Provision for credit losses of $4.14B, exceeding the Visible Alpha estimate of $4.09B, jumped from $2.71B in the previous quarter and $2.64B a year ago.

Net charge-off rate of 3.45% vs. 3.16% in Q3 and 3.59% in the year-ago Q4.

Noninterest expense totaled $9.34B, up from $8.26B in the prior quarter and $6.09B a year ago.

Total deposits of $475.78B at Dec. 31, 2025, increased from $468.8B at Sept. 30. Loans held for investment were $453.6B at Dec. 31, 2025, vs. $443.2B at Sept. 30.

“Years of strategic preparation and our choices to consistently invest to sustain long-term growth and returns enable our results and put us in a strong position going forward,” said Founder, Chairman, and CEO Richard D. Fairbank.

Conference call at 5:00 PM ET.

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The purchase price consists of 50% cash and 50% stock. With the acquisition, Capital One (COF), which acquired Discover Financial last year, gets more capabilities to cater to corporate clients.

The Wall Street Journal first reported the deal earlier on Thursday. Brex was founded in 2017 to serve other startups that were finding it challenging to get corporate cards from traditional companies like American Express (AXP), the report said.

Capital One (COF) expects to close the deal in Q2, the people told the WSJ.

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The House should “think about, investigate” the president’s plan that was floated late Friday, Johnson said, according to Reuters reporting. However, the lawmakers should also analyze the potential for “unintended consequences,” he said.

One possibility is that banks could “stop lending money, and maybe they cap what people are able to borrow at a very low amount,” Johnson commented.

Trump is calling for a 10% cap for a year, starting Jan. 20, 2026, the one-year anniversary of the beginning of his second term. He didn’t say how he would do that. Johnson said it would require legislation.

Credit card stocks sank on Monday after the news. On Tuesday afternoon trading, they were still mostly down, but not as steeply. Bread Financial Holdings (BFH) stock gained 0.1%, Synchrony Financial (SYF) fell 0.8%, Capital One Financial (COF) slipped 0.3%, American Express (AXP) fell 0.7%, Citigroup (C) fell 0.9%, and Bank of America (BAC) declined 1.0%.

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The AG, along with a number of other states, had accused the bank of misleading customers by marketing its 360 Savings accounts as “high interest” accounts, but instead its “360 Performance Savings” provided much higher rates.

The original proposed settlement would have provided less than $300M in restitution payments and would allow Capital One (COF) to continue paying the lower interest rate on 360 Savings accounts, the AG said.

The new settlement, which was preliminarily approved by the court today, will require Capital One to pay $425M in restitution, including an estimated $34M to New Yorkers who had 360 Savings accounts, the NY AG office said. In addition, the bank is required to match 360 Savings and 360 Performance Savings interest rates, erasing the misleading two-tiered system of accounts.

The Office of the Attorney General will voluntarily dismiss its lawsuit if the revised class action settlement receives final approval from the court and goes into effect, the office said.

In January 2025, the Consumer Financial Protection Bureau sued Capital One (COF), for allegedly misleading consumers about the interest rates on its 360 Savings account. The agency later dropped several suits against the bank.

Capital One (COF) stock fell 6.4% in Monday afternoon trading after President Trump ordered a 10% credit card interest rate cap.

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Card-issuing banks, meanwhile, could turn to other tactics like increasing card fees, reducing rewards, cutting expenses, and pulling back on lending to offset the impact of the interest cap, especially if the limit becomes permanent.

But there’s substantial doubt about whether such a cap will succeed, as numerous previous efforts have failed. Lawmakers have repeatedly tried to cap interest rates federally, since the Supreme Court rejected state-level credit card rate caps in 1978, Morgan Stanley analyst Jeffrey Adelson pointed out in a note to clients.

“The gross revenue implication for card lenders would be a material negative (pre offsets), however enforcing such a cap is likely a challenge and has failed in the past,” Evercore ISI analysts led by John Pancari and Glenn Schorr said in a note to clients.

The Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America issued a joint statement over the weekend, saying the executive order would reduce credit availability and drive consumers toward less regulated and more expensive options.

“We think the probability is low, but since the administration has demonstrated intent, we will keep close tabs,” KBW analyst Sanjay Sakhrani wrote in a note to clients. “We doubt the regulators have authority to impose any type of fee cap, and Congress would need to act.”

As it stands, Trump’s edict puts the 10% rate cap in place for one year, which would be manageable for most card-issuing banks, according to equity analysts. A more permanent cap, though, would “sharply hit EPS at most exposed card names, drive less credit for nonprime consumers, reduce card rewards, raise fees, cut costs,” Morgan Stanley’s Adelson said.

“In an economy that is about 70% driven by consumer spending (of which credit card spending represents a little over 20%), it’s clear that any pullback in lending by card issuers could result in potential knock-on effects to the economy,” KBW analyst Sanjay Sakhrani wrote in a note to clients.

He points to the airline and retail industries, which rely on credit card-related revenue. Furthermore, as credit is tightened, consumers will have to turn to other lenders, including neo banks and payday lenders, he said.

“The real issue is the growing pressure since the pandemic from high inflation, increased concentration which results in heightened pricing power, and massive divergence in income/wealth between higher end and lower end consumer segments, with even the middle income segment getting marginalized,” J.P. Morgan analyst Vivek Juneja wrote.

Credit card rates surged as the Federal Reserve boosted rates in an effort to push down inflation. That increase isn’t the main reason for the affordability crisis, Juneja said. “A temporary one-year cap would not alleviate the problem — it would likelyworsen it longer term in our view,” he said.

Among the money center banks, Citigroup (C) has the biggest share of credit card loans, at 23% of total, Juneja noted, followed by JPMorgan Chase (JPM), Bank of America (BAC), U.S. Bancorp (USB), and Wells Fargo (WFC). KBW estimates that Citi (C) 2026 EPS would drop by ~10%. JPM, BAC, WFC and USB would see more modest impacts of -1% to -4%, Sakhrani added.

Morgan Stanley sees significant hits to credit card company book value, with names like Bread Financial (BFH), Synchrony Financial (SYF), Capital One Financial (COF), and American Express (AXP) seeing book value falling as much as 20%-40% under a temporary cap.

“Under simplistic assumptions, the hit to card yields with no offsets would more than eliminate earnings at BFH, COF, & SYF, reduce AXP by 80%, and C by 60%,” Morgan Stanley’s Adelson said. “However, we would expect the industry to respond with meaningful strategy changes, including: less credit extended to the lowest FICO consumers (benefitting provision/NCOs), higher fees, lower credit card rewards, and cutting expenses elsewhere.”

Evercore ISI had a similar conclusion. “Our revenue sensitivity analysis points to 60-70% headwinds at the most NII-concentrated card lenders and 10-30% at the more diversified card lenders,” Pancari and associates said. “Revenue impacts at the universals and regionals are more manageable in the low-single-digit to high-single-digit range.” Similarly, that assessment does not include offsets that lenders would likely pursue.

The amount of risk clearly showed up in stock market action on Monday, with the stocks of lenders that have lower credit score borrowers falling the most. Bread Financial (BFH) stock sank 10% in midday trading, Synchrony Financial (SYF) slid 8.1%, and Capital One Financial (COF) dropped 6.3%.

Among the large banks, Citi (C) fell 3.4%, JPMorgan (JPM) slipped 1.7%, Bank of America (BAC) was off 1.4%, Wells Fargo (WFC) dipped 1.7%, and U.S. Bancorp (USB) descended 2.3%.

J.P. Morgan analyst Richard Shane, who covers consumer finance names, sums it up: “At this point, we view this as a high-severity, low-probability risk likely subject to significant legal challenges. Consequently, we have not changed our fundamental outlook, but highlight increased uncertainty across our sector that is likely to weigh on multiples.”

The firm’s base outlook assumes low single-digit returns for its consumer finance coverage in 2026, “with modest asymmetric risk to the downside.”

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