Financial experts are predicting Capital One’s second-quarter earnings will fall below expectations, despite their moderate success in the first quarter.
The financial institution surpassed expectations last quarter. Its core card business and its commercial lending activity grew, leading to higher revenue numbers.
Higher interest rates and Capital One’s efforts to strengthen card operations will help the bank bolster earnings, but overall, analysts expect a decline in revenue for the second quarter, owing to only modest growth in fee income and net interest income, coupled with a rise in expenses.
One glaring expense was a significant increase in social media ad spending in the company’s efforts to find and attract new customers. Last year, Capital One spent $18.6 million on Facebook advertising alone, a sharp increase from the $2.8 million dedicated for the same purpose in 2017.
The company is also continuing to introduce new Capital One Cafes, like the three opened in Chicago, which each offer a full-service Peet’s Coffee as well as ATMs and “ambassadors” who are available to answer questions and provide assistance.
Capital One is also expanding its services for small and medium-sized businesses with its recent acquisition of BlueTarp, a B2B credit management company that services accounts receivable and aims to streamline the purchase-to-payment transaction.