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Capital One Financial Corp. yesterday reported that its U.S. card unit produced a $168.4 million profit for the second quarter ended June 30, down 50.5% compared with $340.4 million during the same period a year ago. Revenues were $2.39 billion, down 5.5% from $$2.53 billion. The unit's managed net charge-off rate for the quarter was 9.23% of receivables, up 297 basis points from 6.26% during the same period a year ago, but up only 84 basis points from the first quarter's charge-off rate of 8.39%. The 30-day delinquency rate on card loans was 4.77%, up 92 basis points from the same period a year ago but down 31 basis points from the first quarter's 30-day delinquency rate of 5.08%. The charge-off rate during the quarter did not increase as steeply as analysts had expected. Cap One's loan-loss provision for its U.S. card unit rose 20.9%, to $1.33 billion from $1.1 billion a year ago. Total managed loans within the unit declined 4.8%, to $64.8 billion during the quarter from $68.1 billion. Purchase volume during the quarter totaled $23.6 billion, down 11.6% from $26.7 billion. Richard Fairbank, Cap One president and CEO, said a contraction of the company's card-loan portfolio enabled the release of $183 million in funds previously set aside for loan losses, which lifted the segment's profits. While interest income from cards was up, Cap One's income from card fees was down during the quarter "as we continue to see consumers behaving defensively in the current economic environment, spending less, exercising caution to avoid fees and working hard to remain current" with their credit card bills, he noted. The corporation reported an overall net loss of $275.5 million for the quarter compared with net income of $452.9 million a year ago. The results included a charge related to Cap One's repayment during the second quarter of $3.5 billion in federal bailout funds.
