IMGCAP(1)]
Capital One Financial Corp.'s U.S. Card segment yesterday reported a $175.6 million net loss for the fourth quarter ended Dec. 31. The unit reported net income of $498.7 billion for the same period in 2007. Net revenues for the card unit totaled $2.6 billion, down 10.3% from $2.9 billion. Purchase volume totaled $25.2 billion, down 10.6% from $28.2 billion. Cap One's provision for card-loan losses increased 68.1% during the quarter, to $2 billion from $1.19 billion a year earlier. The charge-off rate during the fourth quarter soared to 7.08% of credit card receivables, up 224 basis points from the same quarter in 2007. During a teleconference with analysts yesterday, Richard D. Fairbank, Cap One founder, chairman and CEO, said he expects the company's credit card charge-off rate to rise to about 8.1% during this quarter, which is higher than previous expectations of approximately 7.5%. "Charge-offs increased across our lending businesses as the broad-based economic downturn accelerated during the quarter," Fairbank said. Charge-offs probably will continue to rise throughout this year, he warned, as Cap One assumes the nation's unemployment rate will reach 8.7% by the end of the year and U.S. residential home prices, which have fallen in most U.S. markets, will decline by another 10 percentage points this year.
