Capital One Financial Corp Reports A Record 4th Quarter Loss
Capital One Financial Corp. is the parent company of credit card behemoth Capital One. It also has recently gotten into the branch banking business by buying Louisiana based Hibernia and New York based North Fork Bancorp. They have also reached an agreement to buy Chevy Chase Bank which serves the Washington D.C. area.
Capital One, a Virginia based financial services company, reported a 4th quarter loss of $1.4 billion. The loss came as the company wrote down the value of its auto loan business. They also set aside $1 billion to cover future losses that will come in the form of credit card and loan defaults. It is a preemptive measure in anticipation of rising unemployment and continued recessionary pressure.
Capital One is best known as the issuer of Capital One Visa and Capital One MasterCard credit cards. Chairman and CEO Richard Fairbank expects the recession to last the entirety of 2009 and possibly beyond. Credit card issuers Bank of America, J.P. Morgan Chase, American Express and Citigroup are all experiencing similar losses as credit card defaults mount and credit remains tight.
Industry wide credit card charge-offs increased to 7.08% in the 4th quarter of 2008, compared to 6.13% for the 3rd quarter. Charge-offs occur when cardholders are past 90 days or more in paying their bills. They are consumer defaults and the credit card companies never expect to see that money.
As a whole Capital One’s stock has seen a 32% decline in 2009. That is comparable to the 38% decline as measured by the KBW Bank Index. The KBW Bank Index is a ‘basket’ of 24 bank stocks. The index is weighted to take into account such things as geographic location and market capitalization.
Related Information:
- Chase Raises Fees On Unsuspecting Customers Here is a tough one to swallow. Chase just announced that they would be raising fees on credit card account holders that locked in fixed low APR terms. It seems...
- Credit Card Companies Report Record Defaults It looks like it’s more bad news for credit card companies. All of the major credit card issuers reported seeing record default rates in the month of May. It is...
- Know Your Rights As A Credit Card Holder While Congress works on the newly proposed “credit card bill of rights“, I felt it was important that I share with you exactly what your rights as a credit card...
- Inactivity Can Cost You Your Card Here is a new trend amongst credit card companies, cardholders that do not use their credit cards over the past 12 months are in danger of either having their credit...