2Q26 Recap: Good Qtr.; Continuing to Focus on an Exciting End-Game

Research evidence excerpt

2Q26 Recap: Good Qtr.; Continuing to Focus on an Exciting End-Game

Capital One Financial Corporation (COF)

Equity Research

July 21, 2026

DFS debit and credit card migration

Synergy Capture Tracking As Planned While Credit Migration Prepares for Next Phase. Management

provided a constructive update on the Discover integration, noting the company is now 14 months

into its 24-month integration plan and remains on track to achieve its $2.5B synergy target.

Importantly, the debit network conversion has effectively delivered its full run-rate revenue synergies,

while approximately 1/3 of the expected operating expense synergies have been realized, consistent

with management's view that cost saves would be more back-end loaded as technology and platform

integrations are completed. Management also highlighted early benefits from integrating funding and

balance sheet capabilities, including favorable cost-of-funds dynamics.

Looking ahead, the focus shifts from debit execution to the credit card migration roadmap.

Management reiterated that DFS's loan growth remains temporarily constrained during the

integration process, but expects growth to reaccelerate as operations migrate onto COF's technology

infrastructure. New DFS card originations are expected to be fully migrated onto the COF platform by

3Q26, with conversion of the existing portfolio occurring in phases through 1Q27. This platform work

is viewed as a key prerequisite for broader network migration initiatives and future synergy realization.

NIM: 2Q NIM increased 14 bps Q/Q to 8.01%, driven primarily by a 9 bp benefit from an extra day

in the quarter, with the remainder reflecting lower retail deposit costs and a $5B decline in average

cash balances.