Capital One Financial's fourth-quarter profit fell short of projections as the McLean, Va., company boosted its reserves in anticipation of higher loan losses.
Net income at the firm totaled $920 million, a decrease of 8% from the same period a year earlier. Its earnings per share of $1.58 came in 6 cents below the consensus of analysts polled by Bloomberg.
Capital One's provision for credit losses ballooned to $1.38 billion during the fourth quarter, up 24% year over year and 26% from the third quarter of 2015.
In Capital One's flagship credit-card business, the provision for credit losses was up by $166 million from the fourth quarter of 2014. In the company's far smaller commercial banking unit, the provision for credit losses rose by $86 million.
In the credit-card business, Capital One and other issuers have been saying for some time that losses are expected to rise as loan volumes increase. Capital One grew its credit-card loan portfolio by 12% in 2015.
"The headline for 2015 was industry-leading growth in domestic card loans and purchase volumes," Richard Fairbank, Capital One's chief executive officer, said in a press release.
The company stated that certain adjustments in the fourth quarter also contributed to the fall in net income. It cited $72 million in charges associated with the of an acquisition of a health-care lending business from General Electric, planned site closures, and revisions to earlier restructuring charges.
Also in the fourth quarter, Capital One's noninterest expenses rose by 6% compared with the same period a year earlier, driven in large part by higher spending on marketing.
Net interest income, noninterest income and total net revenue all rose by 7%.