Capital One's Credit Card Growth Slows While Bank of America Analyst Upholds Target

Capital One Financial has spent over a year integrating Discover while investors watch whether the massive acquisition can translate into faster growth and stronger returns. July's latest monthly data gave Wall Street a mixed picture: COF (Capital One) posted healthy credit trends but saw slower growth in its domestic card portfolio compared to the prior month. Bank of America (BofA) remains supportive of the stock. In a note to TheStreet, BofA analyst Mihir Bhatia maintained a Buy rating and a $253 price objective on Capital One, representing an 11.3% upside from the $227.34 price used in the report. July's operating metrics remained healthy overall, with solid credit performance despite slower growth in card balances.

Credit Card Portfolio Growth Slows ### Capital One ended July with $258.9 billion in domestic credit card loans. The portfolio's annualized net charge-off rate was 4.12%, while the 30-day-plus performing delinquency rate was 3.48%. Year-over-year, domestic card loans grew by 1.92%, slowing from 2.58% growth in June. BofA does not expect meaningful acceleration until headwinds tied to Discover integration and related borrow-out activity clear. The analyst models end-of-period card loans to increase by about 1% sequentially in the third quarter.

Credit Quality Improves ### Despite slower card growth, BofA sees credit quality moving in a more favorable direction. Capital One's domestic card net charge-off rate fell by 26 basis points month-over-month in July. This was better than the 20-basis-point average decrease historically seen in July between 2013 and 2019.

Despite slower credit card growth, Capital One's improving credit quality presents a more stable position for investors as the company navigates the challenges of completing its Discover integration while reducing credit risks.

Company Performance ### Capital One completed its acquisition of Discover in May 2025, adding the Discover, PULSE, and Diners Club International networks to its business. CEO Richard Fairbank stated in July that the Discover integration was proceeding well, 14 months after the deal closed. The company reported $3 billion in second-quarter net income, while total net revenue increased sequentially by 4% to $15.9 billion.