Capital One credit card defaults rise in June

NEW YORK (Reuters) - Capital One Financial Corp's U.S. credit card defaults rose in June as unemployment increased and Americans struggled to pay their debts, but the figures were better than expected and the company's shares rose 3.2 percent.

In a regulatory filing on Wednesday, Capital One said the annualized net charge-off rate for U.S. credit cards -- debts the company believes it will never collect -- rose to 9.73 percent in June from 9.41 percent in May.

Capital One, one of the largest issuers of Visa and MasterCard credit cards, said accounts at least 30 days delinquent -- an indicator of future loan losses -- fell for fourth straight month, to 4.77 percent from 4.90 percent.

For U.S. auto loans, Capital One's charge-off rate rose to 3.89 percent in June from 3.62 percent in May, while the delinquency rate increased to 8.89 percent from 8.59 percent.

In international operations, including Canada and Britain, the charge-off rate fell to 9.26 percent in June from 9.77 percent in May, while the delinquency rate was unchanged at 6.69 percent.

"Overall, losses increased slightly from May but were below our projection," Credit Suisse analyst Moshe Orenbuch said in a research note to clients.

Capital One is expected to report its third straight quarterly loss next week, hurt like most of its rivals by growing credit losses and higher provisions for bad loans.

However, U.S. regulators have declared the bank is sufficiently capitalized to face a deep recession, and Capital One has repaid the $3.55 billion it received under the government's bank bailout program.

The bank once specialized in credit cards but expanded into branch banking in recent years after acquiring Hibernia Corp and North Fork Bancorp Inc. More recently, the acquisition of Chevy Chase Bank expanded its presence in the affluent suburbs of Washington, D.C.

Capital One shares rose 3.2 percent to $23.85 in premarket trading. The stock is down 26 percent this year but has more than tripled in price in the past four months, coming off a 13-year low.

(Reporting by Juan Lagorio; editing by Derek Caney and John Wallace)