Capital One profit down 42 percent
NEW YORK (Reuters) - Capital One Financial Corp (COF.N), the largest independent U.S. bank card issuer, said on Wednesday that fourth-quarter earnings fell 42 percent on rising credit card losses and charges related to a shut-down of its subprime mortgage unit.
The McLean, Virginia, company also said its loan portfolio and revenue growth would slow to "low single digits" this year, reflecting a weaker environment.
Fourth-quarter net income fell to $226.6 million, or 60 cents a share, from $390.7 million, or $1.14 a share, in the year-earlier period. The results matched analyst forecasts, according to Reuters Estimates, and were in line with the company's profit warning on January 10.
Excluding a 25 cents a share loss related to GreenPoint Mortgage, which was shut down, income from continuing operations fell to $321.6 million, or 85 cents, from $402.6 million, or $1.17, a year earlier.
Analyst Chris Brendler of Stifel Nicolaus said the results, and Capital One's more cautious outlook, will prompt him to reduce his estimates for 2008.
"They guided us to card losses higher than I was looking for. Seems the stresses I had modeled for were not enough. Things will continue to get worse," Brendler said.
Total managed loans held for investment rose 4.6 percent to $151.4 billion during the quarter, driven by U.S. car and auto lending. Total revenue, on a managed loans basis, rose 5.7 percent in the fourth quarter thanks to wider margins and seasonal loan growth in U.S. cards.
The quarterly provision for loan losses rose to $1.9 billion, covering $1.3 billion in write offs and an increase to reserves of $650 million.
"As the economy has weakened, we have selectively pulled back loan growth and maintained appropriately conservative underwriting standards," said Capital One CEO Richard Fairbank in a statement.
(Reporting by Joseph A. Giannone; Editing by Andre Grenon)
