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Capital One Reports Drop In Domestic Card Average Loans Amid Pandemic

Capital One reported on Thursday (Oct. 22) that domestic card average loans fell in Q3, as consumers spent less and saved more amid the pandemic.

“In the current environment, consumers continue to behave cautiously, spending less, saving more and paying down debts. These behaviors are amplified by the cumulative effect of stimulus and widespread forbearance across the banking industry,” Founder, Chairman and Chief Executive Officer Richard D. Fairbank said in a call with analysts.

Capital One said its domestic cards’ average loans fell 6 percent compared to Q3 2019 to $97.3 billion as of the quarter’s end. Purchase volume likewise dropped 1 percent year over year to $98.1 billion, the bank reported in its supplemental earnings materials. Net interchange revenues also eased 2 percent year over year.

Capital One’s net charge-off rate fell 48 basis points compared to Q3 2019 to 3.64 percent. The bank’s 30+ day delinquency rate likewise dropped 150 basis points to 2.21 percent.

“We posted exceptional credit performance in the third quarter, especially in the context of the pandemic,” Fairbank said on the call.

Additionally, consumer FICO scores of 660 or higher totaled 69 percent of all loans, up only slightly from 68 percent.

Also, on the plus side, Capital One said consumer-banking average loans rose 5 percent to $67.8 billion, while auto loans rose 10 percent on average to $64.5 billion.

“Our auto business posted unusually strong credit results in the third quarter. The charge-off rate improved 137 basis points compared to the prior-year quarter,” Fairbank said.

Overall, Capital One reported $5.05 in diluted losses per common share after excluding adjusting items on net revenues of $7.4 billion. Analysts had forecasted $2.01 earnings per share on revenues of $6.7 billion.

Fairbank noted that the company continues to be well-served by the choices it made pre-COVID-19 and that “our investments to transform our technology and how we work and our efforts to drive the company to digital are powering our response to the downturn and positioning us for the acceleration of digital change and adoption driven by the pandemic.”

Capital One Financial Corp. (NYSE: COF) Thursday (Oct. 22) announced net income for the third quarter of 2020 of $2.4 billion, or $5.06 per diluted common share, compared with a net loss of $918 million, or $2.21 per diluted common share in the second quarter of 2020, and with net income of $1.3 billion, or $2.69 per diluted common share in the third quarter of 2019. Excluding adjusting items, net income for the third quarter of 2020 was $5.05 per diluted common share

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