Capital One Financial (COF) risk factors, 2025 10-K

Risks Relating to the Acquisition of Discover

1. 01We expect to incur substantial expenses related to the Transaction and to the integration of Discover, and the expenses may be greater than anticipated due to unexpected events
2. 02Capital One Financial Corporation (COF)
3. 03We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control or Discover’s control. We may also encounter significant difficulties in integrating Discover
4. 04Our future results may suffer if we do not effectively manage our expanded operations following the Transaction

General Economic and Market Risks

1. 05Changes and instability in the macroeconomic environment could disrupt capital markets, reduce consumer and business activity, and weaken the labor market, all of which could impact borrowers’ ability to service their debt obligations and adversely impact our financial results
2. 06Fluctuations in interest rates could adversely affect our business, results of operations and financial condition
3. 07We may not be able to maintain adequate sources of funding and liquidity to operate our business
4. 08We may experience increases in delinquencies and credit losses, or we may incorrectly estimate expected losses, which could result in inadequate reserves
5. 09We may not be able to maintain adequate capital or liquidity levels or may become subject to revised capital or liquidity requirements, which could have a negative impact on our financial results and our ability to return capital to our stockholders
6. 10Limitations on our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends and repurchase our common stock
7. 11A downgrade in our credit ratings could significantly impact our liquidity, funding costs and access to the capital markets

Operational Risk

1. 12We face risks related to our operational, technological and organizational infrastructure
2. 13We face risks resulting from the extensive use of models and data, as well as from our evolving use of AI
3. 14movements or customer behavior and liquidity, especially during severe market downturns or stress events (e.g., geopolitical or pandemic events)
4. 15Fraudulent activity associated with our products could cause our fraud losses to increase, the use of our products to decrease and our brands to suffer reputational damage, all of which could have a material adverse effect on our business

Legal and Regulatory Risk

1. 16Compliance with new and existing domestic and foreign laws, regulations and regulatory expectations is costly and complex, and any significant changes may adversely affect our business
2. 17Our businesses are subject to the risk of increased litigation, government investigations and regulatory enforcement

Other Business Risks

1. 18We face intense competition in all of our markets, which could have a material adverse effect on our business and results of operations
2. 19Our business, financial condition and results of operations may be adversely affected by legislation, regulation and merchants’ efforts to reduce the interchange fees charged by credit and debit card networks to facilitate card transactions
3. 20If we are not able to invest successfully in and introduce digital and other technological developments across all our businesses, our financial performance may suffer
4. 21We may fail to realize the anticipated benefits of our mergers, acquisitions and strategic partnerships
5. 22may be granted. Consequently, we may not obtain governmental or regulatory approval for a proposed acquisition on acceptable terms or at all, in which case we would not be able to complete the acquisition despite investing resources in pursuing it
6. 23Reputational risk and social factors may impact our results and damage our brand
7. 24If we are not able to protect our intellectual property rights, or we violate third-party intellectual property rights, our revenue and profitability could be negatively affected
8. 25Our risk management strategies may not be fully effective in mitigating our risk exposures in all market environments or against all types of risk
9. 26Our business could be negatively affected if we are unable to attract, develop, retain and motivate key senior leaders and skilled employees
10. 27Our ability to attract, develop and retain qualified employees is also affected by perceptions of our culture and management, including our position on remote and hybrid work arrangements, our profile in the regions where we have offices and the professional opportunities we offer
11. 28We face risks from catastrophic events
12. 29Climate change risks can manifest as physical or transition risks
13. 30We face risks from the use of or changes to assumptions or estimates in our financial statements
14. 31The soundness of other financial institutions and other third parties, actual or perceived, could adversely affect us