Important: We are changing how we distribute our weekly jobs edition.

You can expect two editions per week.

There is no change to the news edition (what you’re reading now)

There is a change to our end-of-week Jobs edition.

1. Readers will need to opt in to receive the jobs edition via email.

2. Those who opt in will receive the edition a day before it’s published online.

Click here if you want to receive the jobs edition via email

Capital One is sticking to its growth game plan, even as economic clouds loom. The financial heavyweight reported a strong Q1 2025, with adjusted EPS of $4.06 beating J.P. Morgan’s estimate by a healthy margin. The quarter was buoyed by improved credit performance across the board—delinquencies (DQs) came in better than seasonal expectations, revolve rates remained below pre-pandemic levels, and payment behavior improved. Management flagged the consumer as a continued "source of strength," pointing to healthy job creation, real wage growth, and manageable debt servicing burdens. Still, the uptick in customers making minimum payments signals some stress brewing at the margins due to inflation and high interest rates​.

Spending trends added a bit of intrigue to the outlook. While card spending stayed stable through Q1, management highlighted a recent "uptick" in per-customer growth, fueled by seasonal factors like Easter and a run on electronics ahead of anticipated tariffs. Interestingly, this spending boost didn’t extend to Capital One’s small business portfolio, suggesting consumer resilience is more pronounced than business momentum right now. Management also reaffirmed its confidence in achieving synergies from the Discover merger, though the closing may now take six months longer than planned due to regulatory and integration timelines​.

On the credit side, improved metrics enabled Capital One to release reserves—$473 million from credit cards alone—although a more cautious macro outlook partially offset the impact. The baseline forecast, which assumes unemployment peaking at 4.3% and inflation hovering in the high 2% range, remains stable. However, the company has placed greater weight on a downside scenario involving higher unemployment and persistent inflation. Meanwhile, tariffs are already affecting behavior: consumers are rushing to buy autos before new duties hit, pushing up auction prices and prompting the company to stay aggressive in auto originations. Overall, the tone is clear—Capital One is still “leaning in,” but with a cautious eye on economic volatility​. [J.P. Morgan’s Research] [Capital One]

The Capital One-Discover Merger

We tend to skip over payment news in this newsletter, but we felt this one was too important not to share. Erin McCune, a payments expert, notably pointed out two facts that are likely lost on most people:

• The acquisition unlocks the potential to leverage Discover's hidden global debit partnerships (like UnionPay, RuPay) into a more unified international payment system.

• Capital One gains the ability to create its own unique payment products and rules directly on the Discover network, offering a competitive advantage over issuers dependent on Visa/Mastercard.

For a readable background on the Capital One-Discover deal, Erin also cites two reports published by the International Center for Law & Economics.

• The Capital One-Discover Merger: A Law and Economics Analysis (July 2024)

• An Update on the Capital One-Discover Merger: Is There a Subprime Market for Credit Cards?

Both are worth reading, and it’s important to note that the combined Capital One-Discover entity would hold approximately 30% of subprime credit card balances. And the merger could actually benefit consumers with lower credit scores. This is because Capital One's sophisticated analytics can identify lower-risk individuals within this expanded group, potentially leading to better terms being offered.

Be sure to subscribe to stay informed. It’s free!

We couldn’t produce this newsletter without our sponsor (and friends) at Spinwheel (a QED-backed fintech)

Reduce friction in your lending application with only two required fields: phone number and birthdate! Seamlessly access real-time credit data and payment processing, and watch your application rates jump by 20-30%. Get started today!

Simon Owens, a media industry expert, shares his thoughts on why “AI Overviews Reduce Clicks by 34.5%”

Linking to an Ahrefs article, AI Overviews Reduce Clicks by 34.5%, Simon shares why he’s not surprised by this fact.

And, for what it’s worth, Google’s AI Overview definitely hits home. A simple search of “what is the best credit card for travel” returns the Capital One Venture X Rewards Card. I’m sure some members of the Toaster community will have very strong views for and against this. Either way, apparently that’s what Google’s AI thinks, and if the Ahrefs article is true, it might not be as big of a deal as some would think.

Brian Moynihan, Bank of America CEO: "We have a multifarious loan book across types of clients, geographies, and various asset classes. That holds us in good stead. In total, our consumer loans are down more than $200 billion, as home equity loans are down more than $125 billion and credit card loans -- unsecured credit card loans are down by more than $60 billion. This reflected a concentrated effort on us to focus on our relationship loans rather than loans as a product and deepen those relationships with the highest-quality prime credit customers." [Bank of America - Q1 2025]

Charlie Scharf, Wells Fargo CEO commented, “We produced solid results with diluted earnings per share increasing 16% from a year ago reflecting fee-based revenue growth across many of our core businesses, continued expense discipline, improved credit results, and an 8% reduction in diluted common shares as we continued to return capital to shareholders. I am excited about the momentum we are building across our businesses as we work to build one of the most respected financial institutions in the country.” [Wells Fargo - Q1 2025]

Jane Fraser, Citi CEO said, “With net income of $4.1 billion we delivered a strong quarter, marked by continued momentum, positive operating leverage and improved returns in each of our five businesses. [...] USPB was up 2%, driven mainly by growth in Branded Cards, and also saw improved returns. [...] We remain intently focused on executing our strategy, which is based on a diversified business mix and will perform in a wide variety of macro scenarios. When all is said and done, and longstanding trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency." [Citi - Q1 2025]

Michael Rhodes, Ally CEO: “Ally delivered solid first quarter results, reflecting continued momentum across our market-leading franchises – Dealer Financial Services, Deposits, and Corporate Finance.” [Ally - Q1 2025]

Brian Doubles, Synchrony President and CEO: “Synchrony delivered a strong first quarter 2025 performance, which reflected the inherent resilience of our diversified portfolio of products and spend categories and our differentiated approach to serving our customers and partners” [Synchrony - Q1 2025]

If this kind of stuff interests you, be sure to follow our friend Cole Gottlieb at Cross River who always does a great time at summarizing earnings as they come out.

Subscribe today to ensure you don’t miss exclusive content!