Capital One Card Charge-Offs Hit Nearly 7 Percent in November

Major credit card issuer Capital One Financial Corp. (NYSE: COF) said Monday that its annualized rate of charge off in its credit card business hit 6.98 percent in November, up significantly from last year and the prior month.

Cap One said in an SEC filing that total net principal charge-offs in its U.S. card division were $403.7 million in November, up from $222.4 million in November of 2007 and up from $376.3 million in October of this year. The annualized charge off rate last month was 6.54 percent.

The company’s 30+ days delinquency rate also spiked in November to 4.70 percent, up from 4.48 percent last month.

Capital One also reported that its 30+ day delinquency rate in its auto lending unit rose to 9.48 percent in November, up from 9.14 percent in October.

"Delinquencies rose across all segments as recessionary pressures continue to hit consumers," wrote Citi Investment Research analyst Donald Fandetti in a note to clients. "As unemployment forecasts continue to rise, we expect to see Capital One's loan loss reserves continue to rise and expect to see net charge offs increase through 2009 and into early 2010, surpassing historical peak levels.”

Capital One, one of the largest credit card issuers in the U.S., announced recently that it was buying regional bank Chevy Chase Bank to bolster deposits (“Chevy Chase Bank Deal Advances Capital One Diversification Strategy,” Dec. 15).