September 15, 2010
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News: Capital One Doesn't Fare As Well In Aug
It appears the decrease in credit card defaults for Capital One Financial didn't stick for long. While defaults fell slightly in July, according to the company's most recent regulatory filing Capital One's credit card defaults rose slightly for another month of August. The bank reported that the annualized net charge-offs (defaults) in August rose to 8.19 percent. Capital One's July's filing indicated credit card defaults were $366.8 million or 8.13 percent of the total outstanding card balances which was down from the previous month of 9.3 percent or $422.5 million. The international charge-off rate which includes Canada and Great Britain decreased to 7.62 percent in August from the previous month of 7.86 percent. International defaults were also down in July from the previous month as well. Card defaults are typically more than 180 days past due and is consumer debt that banks do not expect to recoup payment from cardholders.
Despite the slight increase in credit card defaults, Capital One cardholders continue to do a better job at paying on-time. Short term delinquencies of 30 days or more declined slightly to 4.56 percent during August down from 4.66 percent in July and June's rate of 4.79 percent. Capital One which is the third largest issuer of Visa branded credit cards has had a more difficult time than other card companies during the recession. However, the bank's international delinquencies continue to decline. International delinquencies fell to 5.82 percent from the previous month of 5.94 percent.
Unlike last month, auto loans didn't fare as well either. As credit card defaults rose slightly so too did Capital One's auto loan category. Auto loan defaults also increased to 2.75 percent in August up from 2.60 percent in July. Auto loan delinquencies also rose slightly to 8.04 in August, up from 7.72 percent in July. Capital One suffered some of the highest default rates in the industry as charge-offs rose to 10.41 percent in January 2010. The company's shares have reflected the lack of confidence and satisfaction of investors. Since the latest report, shares have remained flat., Capital One is a global company offering a variety of financial services and is headquartered in McLean, Virginia.