MCLEAN, Va.—Could Capital One become the next Visa or Mastercard? One report suggests it’s a possibility.
“Capital One's credit card business is a highly profitable one,” the Motley Fool noted. “Thanks to the average credit card APR of about 25% in the current environment and relatively low deposit costs, Capital One has a net interest margin (NIM) of about 6.7% throughout its business.”
Big banks would typically be happy with a NIM in the 2%-3% range, The Motley Fool added.
And Capital One is about to get much bigger.
As CUToday.info reported, Capital One announced in February that it had agreed to acquire Discover in an all-stock transaction that values the business at about $35 billion.
‘A Big Move’
“While this clearly is a big move for Discover, it can be an even bigger deal than many investors believe…and could eventually put Capital One in the same realm as Visa and Mastercard,” The Motley Fool said.