Capital One Financial Corp., which reported a profit for the first time in a year last month, said it expects U.S. credit card chargeoffs to rise this quarter.
Chargeoffs "will reach a peak in the next one to two quarters," the lender said Monday in a regulatory filing. The McLean, Va., company said continued declines in its managed loan portfolio would probably result in further increases in the chargeoff rate, the company said.
Capital One said chargeoff and delinquency rates in auto finance will also increase in the fourth quarter "in line with expected seasonal patterns." It said it expects continued "economic deterioration" to lead to further increases in nonperforming loans and chargeoffs across its commercial banking business.
The chargeoffs reflect the cost of soured loans that the lender does not expect to be repaid.
The company also plans to sell trust-preferred securities due in 2040.
Capital One sold preferred debt in July, issuing $1 billion of cumulative trust-preferred securities through Capital One Capital V, according to data compiled by Bloomberg. The 30-year, 10.25% securities priced to yield 10.375%, according to Bloomberg data.