Business

Friday July 24, 2009

Capital One posts 2Q loss as charge-offs worsen


NEW YORK: Capital One Financial Corp., one of the largest U.S. credit card issuers, on Thursday reported a second-quarter loss of $275.5 million as the amount of uncollectible debt grew.

But the McLean, Virginia-based company noted that delinquencies slowed in the quarter.

The company, which also owns banks, lost 65 cents per share in the quarter compared with a profit of $452.9 million, or $1.21 per share, in the same quarter a year ago.

Excluding $461.7 million the company paid to redeem preferred shares the government had purchased as part of the TARP bailout program, Capital One said it earned $224.2 million, or 53 cents per share.

Revenue fell to $3.18 billion from $3.35 billion last year, as the increase in net interest income from loans was more than offset by a drop in non-interest income, which comes from fees and other sources.

The bottom line beat the 73 cents per-share loss expected by analysts polled by Thomson Reuters, but Capital One's revenue fell short of their forecast of $3.88 billion.

Net charge-offs rose to $1.12 billion from $793 million last year. Capital One increased the amount set aside for loan losses to $934 million from last year's $829.1 million.

Its U.S. credit card operations saw a net charge-off rate, the percentage of debt it does not expect to be repaid, of 9.23 percent, up from 6.26 percent a year ago.

Loans delinquent for 30 days or more had a rate of 4.77 percent, up from 3.85 percent year-over-year. But it improved from the first quarter by 0.31 percentage points.

U.S. card operations earned $168.4 million in the quarter, down from $340.4 million. Local banking operations lost $211 million, compared with a profit of 67.1 million.

Total deposits stood at $116.7 billion at the end of the quarter.

Capital One closed on its $520 million purchase of Chevy Chase Bank in the first quarter.

The deal added $14 billion in deposits, as well as branches in Maryland, Virginia and Washington, D.C.

The auto finance unit's profit nearly tripled in the quarter to $97.2 million, while international operations earned $5.2 million, down from $33.6 million.

Shares of Capital One rose $1.36, or 5.1 percent, to $27.83 on Thursday in an up market. - AP


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