Capital One beats profit estimates on interest income boost

Signage is seen outside a Capital One Bank in Manhattan, New York

(Reuters) - Capital One Financial on Thursday sailed past estimates for third-quarter profit as the consumer lender charged higher interest rates on loans, sending its shares up more than 4% in extended trading.

A rise in borrowing costs over the past year by the U.S. Federal Reserve has boosted profits at lenders as customers pay higher interest rates on everything from mortgages to their outstanding balances on credit cards.

Capital One's interest income climbed 6% to $7.42 billion in the quarter, compared with about $7 billion a year earlier.

In line with broader industry trends, higher deposit costs led to net interest margin contracting to 6.69% versus 6.80% in the year-ago quarter.

Capital One reported adjusted earnings of $4.45 per share in the three months ended Sept. 31. Analysts on average had expected $3.25 per share, according to LSEG data.

(Reporting by Manya Saini in Bengaluru; Editing by Anil D'Silva)