Discover Financial Services

DFS

Market cap $50.3B

Capital One's acquisition of Discover makes it the largest US credit card holder, accelerating net interest income and EPS growth. Immediate synergies include $2.7B in cost savings and new revenue from moving debit cards onto the Discover network, despite higher-than-expected integration costs. Capital One's cloud technology leadership offers a major opportunity to modernize Discover's infrastructure, enabling lower costs and better risk management.

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The merger between Capital One and Discover Financial put a dent in bank profits. Second-quarter data released Tuesday (Aug. 26) by the Federal Deposit Insurance Corp. showed $66.9 billion in profits for the banking sector, down 1% from the previous quarter.

The completed merger between Capital One and Discover Financial weighed down bank profits in the second quarter, as the sector reported $69.9 billion in profits, down 1% from the quarter prior.

Capital One's acquisition of Discover creates a powerful card issuer and payment processor, positioning the company for strong future shareholder returns. Despite one-time acquisition impacts, adjusted earnings and net interest margins remain robust with a single-digit P/E and growing deposits and loans. The company boasts strong reserves, high liquidity coverage, and a CET1 ratio of 14%, ensuring financial stability and resilience against downturns.

The acquisition of Discover Financial is in the rearview mirror, having been completed in May. For Capital One, the focus is on building scale with the combined entities and on building out a national banking brand.

'Mad Money' host Jim Cramer looks at what Capital One's merger with Discover would mean for the companies and investors.

'Mad Money' host Jim Cramer looks at what Capital One's merger with Discover would mean for the companies and investors.

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Capital One Financial has reportedly entered a “new era” after completing its acquisition of Discover Financial Services. [contact-form-7] With the acquisition, Capital One grew in size and added a debit and credit card network, which could “supercharge” its banking and card businesses, The Wall Street Journal (WSJ) reported Friday (June 27).