Capital One Sees 3Q Profit Increase; Reports Decline in Auto Loans
Attributing its third-quarter decline in auto loans to a retrenchment and repositioning of its auto finance business, Capital One reported a 3.3 percent decline in auto loans last Thursday — the same day the McLean, Va.-based company reported a 14 percent increase in third-quarter profits.
Attributing its third-quarter decline in auto loans to a retrenchment and repositioning of its auto finance business, Capital One reported a 3.3 percent decline in auto loans last Thursday — the same day the McLean, Va.-based company reported a 14 percent increase in third-quarter profits.
Capital One’s net income for the quarter rose to $425.6 million from $224.2 million in the second quarter and $374.1 million in the year-ago period. Its consumer banking segment reported a net income of $184.6 million, with revenues increasing $56.5 million during the quarter.
Auto loans declined $667.3 million to $19.6 billion during the quarter, compared to $19.9 billion during the second quarter and $22.3 billion during the year-ago period.
The managed net charge-off rate for consumer banking increased 46 basis points in the third quarter to 2.67 percent. The managed net charge-off rate for auto loans increased 73 basis points from the second quarter to 4.38 percent.
The 30-day delinquency rate for the auto segment was 9.52 percent, the highest point since the fourth-quarter 2008 when the rate stood at 9.90 percent. The rate, which stood at 9.31 percent in the year-ago period, dropped to 7.48 percent in the first quarter before climbing to 8.89 percent in the second quarter.
“We’ve worked for years to position our company to be resilient, and our third-quarter results demonstrate the resiliency in the midst of the most challenging economic cycle we’ve seen in generations,” said Richard Fairbank, Capital One’s chairman and chief executive officer. “We are successfully weathering the storm, but the storm is not over. Therefore, we will continue to take the decisive actions necessary to place our company in the best position to navigate the downturn and drive shareholder value over the cycle.”
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