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Pressured by rising charge-offs and lower cardholder spending, Capital One Financial Corp.'s U.S. Card segment yesterday reported net income of $291.7 million for the third quarter ended Sept. 30, down 18.2% from $356.5 million during the same period last year. Total revenue decreased 3.3%, to $2.9 billion from $3 billion. Purchase volume for the quarter was down 11.9%, to $25.9 billion from $29.4 billion. Average managed loans totaled $71.9 billion, down 9.3% from $79.3 billion. The card unit's net charge-off rate during the quarter was 9.59% of receivables, up 349 basis points from 6.1% a year ago, while its 30 days-plus delinquency rate increased by 119 basis points, to 5.53% of receivables from 4.34%. During a conference call yesterday with analysts, Richard Fairbank, Cap One chairman and CEO, said he expects the company's credit card loan balances to continue to decline during the fourth quarter and through the first part of 2010 because of "weak demand from creditworthy borrowers" and "elevated" charge-offs. "We expect to reach the peak of charge-off dollars in the next couple of quarters, ... but to be clear, nearing a peak does not necessarily mean that we're nearing the beginning of a robust recovery," he said.
