(Reuters) - Capital One Financial (NYSE:COF)'s profit fell 61% in the second quarter, it reported on Tuesday, as it set aside more money to cover losses on loans.
Net income available to common stockholders fell to $531 million or $1.38 per share versus $1.35 billion or $3.52 per share a year earlier.
"The U.S. consumer remains a source of strength in the overall economy," CEO Richard Fairbank told analysts on a conference call.
"In this high interest rate environment, the cost of new borrowing has gone up" for mortgages, auto loans and credit cards, he said, adding that this has stretched some borrowers, but that "consumers are in reasonably good shape."
Capital One set aside $3.9 billion in provisions for loan losses, up from $2.5 billion a year earlier.
Net charge-offs, or debts that are unlikely to be recovered, rose to $2.6 billion from $2.2 billion a year earlier.
Capital One shares were down about 0.9% in after-hours trading on Tuesday.
The company plans to strengthen its domestic card and national consumer banking businesses, while increasing its spending on marketing, Fairbank said.
Meanwhile, the lender is "all in" on its work to complete its purchase of Discover Financial, he said.
The $35 billion acquisition, once finalized, will grant the company access to Discover's credit card network, which is the fourth-largest in the United States.
If approved, the deal is expected to be completed late this year or early next year, Fairbank said.
Opponents of the deal say that the merger will hurt consumers in the long run and create another too-big-to-fail bank, while the lender and its proponents say the deal will boost competition in payments.
(This story has been refiled to remove the extraneous word, in paragraph 11)