Cap One’s Card Income Rises 28%

Capital One Financial Corp. (NYSE: COF) late yesterday released second quarter earnings of $750.4 million, up nearly 36 percent from $552.6 million in the second quarter of 2006. Revenues were $3.6 billion up 24 percent from $2.9 billion in the same period a year ago.

The U.S. card division reported net income of $538.3 million, a 28 percent rise from $421.8 million a year ago. Card receivables finished the quarter at $50.0 billion. A year ago Cap One reported receivables of $48.7 billion.

The card charge off rate was 3.73 percent, up from 3.29 percent a year ago. Cap One said the rate increased 31 basis points due to the implementation of reduction in the cardholder statement from 30 days to 25 days. The 30-day delinquency rate in 2007’s second quarter was 3.41 percent, up from 3.30 percent a year ago. Cap One reported the increases in charge offs and delinquencies were the result of the “continued normalization of consumer credit” following the bankruptcy law changes of 2005. Cap One said it expects card charge offs to stabilize at 5 percent at the end of the year.  

The Auto Finance group held loans of $24.0 billion at the end of the quarter. Net income declined 60 percent from $95 million to $38 million due to greater mix of prime loans and increase in the provision for of $107.6 million, according to McLean, Va.-based bank.