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4mo ago

Capital One Secures Regulatory Approval for $35.3 Billion Discover Acquisition

The merger, set to close on May 18, positions Capital One as the largest U.S. credit card issuer while Q1 results reveal profit growth and integration cost forecasts.

A screen displays the logo and trading information for Discover Financial as traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 20, 2024. REUTERS/Brendan McDermid
Screens display the logos and trading information for Capital One Financial and Discover Financial as traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 20, 2024. REUTERS/Brendan McDermid
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Overview

  • Capital One received final regulatory approvals for its $35.3 billion purchase of Discover Financial Services, with the deal scheduled to close on May 18, 2025.
  • The acquisition will make Capital One the largest U.S. credit card issuer by balances and provide control over Discover's payment network, enhancing vertical integration opportunities.
  • Capital One reported a Q1 2025 profit of $1.33 billion, a 10.8% increase from the previous year, driven by a 7% rise in net interest income to $8.01 billion.
  • Discover-related expenses of $110 million and $198 million in legal reserves impacted quarterly earnings, with integration costs forecasted to reach $1.5 billion by 2027.
  • Improved consumer credit metrics were highlighted, including a 5% growth in purchase volumes and a 23-basis-point year-over-year drop in delinquency rates to 4.25%.