Capital One Earnings Rise 14%
>>>Please tell me from where all the earnings came if the loans are going bad at increasing rates???<<<
By JOHN KELL
Capital One Financial Corp. posted a 14% increase in third-quarter profit as the credit-card lender posted higher revenue and a lower tax rate, although loan-loss provisions rose.
Shares climbed 6.8% to $41 in after-hours trading.
Lenders have been hurt by rising delinquency rates, a key gauge of future losses, as consumers struggle amid high joblessness. The industry is also coping with sweeping legislation restricting certain fees and rate increases that will bite into income. A number of lenders have responded by scaling back on credit and getting tougher about lending standards.
Capital One posted earnings of $425.6 million, up from $374.1 million. The per-share figure dropped to 94 cents from $1 due to a higher amount of shares outstanding. Revenue increased 2.8% to $3.6 billion. On a managed basis, revenue grew 9.9% to $4.63 billion at the Virginia-based banking company.
Analysts polled by Thomson Reuters expected 14 cents and $4.12 billion, respectively.
On a managed basis, which includes securitized loans still managed by Capital One, loan-loss provisions were $2.2 billion, up 22% from a year earlier and 16% from the second quarter. The net charge-off rate climbed to 6% from 4.3% and 5.62%, respectively, while delinquencies of at least 30 days were 4.55%, compared with 3.99% and 4.09%, respectively.
The tangible common equity ratio, which reflects how much of its hard assets are held by common shareholders, was 6.21% at the end of the quarter, down from 6.47% a year earlier, but up from 5.69% at the end of the second quarter.
Capital One's U.S. card business's charge-off rate rose to 9.64% from 6.13% a year earlier and 9.23% in the second quarter. Delinquencies were 5.38%, compared with 4.2% and 4.77%, respectively. |
