2026-04-09The Schiehallion Fund (Baillie Gifford)NeutralThe Schiehallion Fund Annual Report - including the Notice of AGM - 31 January 2026Detail →
Earnings Callsⓘ
Q3 2026October 20, 2026
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### At a GlanceCapital One's Q3 2026 results show management believes the post-transaction earnings potential is already within reach, but the company will continue to increase investment. Management emphasized that through several adjustments, current results already reflect the post-transaction earnings potential, without waiting for integration to complete. At the same time, the company will continue to invest in marketing, AI, and the Discover network, viewing these as key to long-term value creation.
Key Data: Q3 credit card net charge-off rates improved, but delinquency rates recently only met seasonal expectations, with no further outperformance. Discover card loans contracted 2.9% year-over-year, but new loan originations grew year-over-year for the first time. Period-end cash stood at approximately $50 billion, below the quarterly average.
Business Progress: Discover debit cards have been successfully migrated to its network, and credit card conversion is underway, with 100% of new originations already migrated to the Capital One tech stack. Legacy account conversion is expected to be completed in Q1. Following the acquisition of Brex, the company will integrate its expense management tools with the Capital One travel portal and leverage its technology platform. Venture X continues to gain customers in the premium card market, and management believes competition is intense but the company is well-positioned.
Guidance & Outlook: Management expects Discover card loans to continue contracting over the next few quarters before returning to positive growth. The structural impact on net interest margin is largely over, with future movements driven by seasonality and business mix. The efficiency ratio is affected by investment and business mix changes, and no specific guidance is provided.
Risk/Highlight Signals: Management has high confidence in the approval of the Visa/Mastercard settlement agreement and has incorporated it into planning, expecting the impact to be roughly offset by additional synergies. AI is viewed as a transformative change on the level of "fire and electricity." The company has been rebuilding its tech stack with AI as a target since 2013, believing it is well-positioned but requires continued investment.