ING Acquisition, Auto Lending Boost Earnings for Cap One
Capital One's total revenue from its legacy portfolio grew 5.2 percent from the sequential quarter thanks to strong growth in auto loans as well as strong auto finance originations during the quarter.
CHICAGO — Boosted by the recently closed acquisition of ING Direct, Capital One Financial’s earnings increased from $407 million in the end-of-year 2011 quarter to $868 million, but fell from $1 billion in the year-ago period.
The biggest driver of COF's earnings was largely due to higher revenue, both including the ING Direct acquisition and from growth in the company's legacy businesses, Fitch reported. Overall revenue expanded 22 percent from the sequential quarter due to $40.4 billion of loans attributable to the ING Direct acquisition.
Excluding the completed acquisition, COF's total revenue from its legacy portfolio grew 5.2 percent from the sequential quarter thanks to strong growth in auto loans as well as strong auto finance originations during the quarter. Fitch notes that auto lending continues to be a strong area of growth for COF.
While these results were generally positive, Fitch noted that COF continues to increase its reserve for mortgage representation and warranty claims. The company provisioned an additional $169 million for these claims in the first quarter, which brought the total reserve to $1.1 billion. Fitch expects this to continue to be a drag on earnings in 2012.
Fitch also noted that COF's credit quality metrics continue to be good. Overall net charge-offs (NCOs) during the quarter were 2.04 percent, down from 2.69% in the fourth quarter 2011. Additionally, 30-plus day delinquency rates declined in both the card and consumer banking segments.
More Auto Finance
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Auto Lenders, Consumers on a Tightrope
April borrowing data shows that more consumers are bending over backward to buy vehicles, though subprime lending cooled off for the month.
Read More →
Toyota Financial Services President Replaced
Scott Cooke has served in various roles with Toyota Financial Services for over 20 years, including president and CEO, which he retires from on June 30.
Read More →