Capital One Earns Place as 2012 Bank Stock Pick

But Capital One still looks like a winner, since its returns on assets and equity are likely to beat the bigger banks over the long haul. Credit cards are simply more profitable than most other loan types, because of the high interest rates that consumers are willing to pay. And while the bigger banks also enjoy investment banking and trading revenue streams, these can be quite volatile.

Capital One's first-quarter net interest margin -- the difference between a bank's average yield on loans and deposits and its average cost for deposits and wholesale borrowings -- was 6.20% during the first quarter, declining by over 1% from the fourth quarter, "as a result of the on-boarding of ING Direct's lower yielding assets and temporarily high cash balances," according to the company.

Following the second quarter, when those cash balances will be put to work, supporting the HSBC card portfolio purchase, Capital One should see quite a boost in the margin.

For the first quarter, Bank of America's net interest margin was just 2.45%, according to Thomson Reuters Bank Insight, while Citigroup's net interest margin was 2.85%, and JPMorgan Chase's NIM was 2.56%.

Interested in more on Capital One? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

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