Capital One Financial (COF -0.97%) reported a net loss of $918 million, or $2.21 per share, in the second quarter, primarily due to a $4.2 billion provision for credit losses -- including a $2.7 billion reserve build due to the pandemic-related economic downturn.

The allowance build consists of $1.7 billion for potential credit card losses, $668 million for auto loan losses, and $330 million for commercial loan losses.

"Our allowance is based primarily on an economic forecast derived from the consensus of third-party economists.," CFO Scott Blackley said on the earnings call. "That forecast includes unemployment in the second quarter of 16.9% falling to 11.5% at the end of 2020 and gradually improving over the course of 2021 to end at 8.1%."

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The net loss is down from a $1.6 billion net gain, or $3.24 per diluted share, in the second quarter of 2019. But it follows a net loss of $1.3 billion in the first quarter of this year.

Net revenue decreased 10% to $6.6 billion in the second quarter, while operating expenses jumped 8% year over year to $3.5 billion. The bank's efficiency ratio, which measures costs in relation to revenue, went up 6% to 57.5%.

The common equity Tier 1 ratio, a bank's core capital against its risk-weighted assets to gauge its ability to withstand shocks, went up 10 basis points to 12.4% year over year, above the Federal Reserve's capital requirement of 10.1%. Liquidity from cash, cash equivalents, and securities increased to $149 billion, and the liquidity coverage ratio went up to 146%, well above the 100% requirement.

Blackley said the bank plans to reduce its third-quarter dividend to $0.10 per share, from $0.40 per share, subject to board approval, based on the Fed's income formula. Blackley said Capital One is committed to preserving the dividend in the fourth quarter, but that will be "largely driven on what happens with the allowance."