Helped by a lower rate of U.S. cardholder defaults and higher purchase volume, Capital One Financial Corp.’s credit card business generated net income of $663 million during the third quarter ended Sept. 30, up 5.1% from $631 million a year earlier, the company reported Oct. 20.
Total revenues for the card operation rose 3.8% to $2.7 billion from $2.6 billion.
Cap One’s international card operation experienced only a modest reduction in cardholder losses and its provision for loan losses rose, cutting into potential profits.
Net income for the U.S. card unit was $637 million, up 17.1% from $544 million a year earlier, with revenues reaching $2.34 billion, up 3.1% from $2.27 billion.
U.S. purchase volume rose 27.3% to $31.7 billion compared with $24.9 billion.
Net interest income for the U.S. card operation rose 3.6% to $1.75 billion compared with $1.69 billion, and income from fees and other sources rose 2.3% to $588 million from $575 million.
The provision for loan losses declined 34% to $381 million from $577 million. The U.S. charge-off rate was 3.92%, down 431 basis points from 8.23% a year earlier.
Cap One’s U.S. card unit held $53.82 billion in loans at the end of the quarter, nearly flat with $53.84 billion a year earlier.
The international credit card unit produced $26 million in net income, down 70% from $87 million a year earlier, with revenues reaching $379 million, up 11.8% from $339 million.
International purchase volume was $3.2 billion, up 45.5% from $2.2 billion.
Net interest income rose 19% to $289 million from $243 million, while income from fees and other sources declined 6.25% to $90 million from $96 million.
The provision for loan losses rose 56.6% to $130 million from $83 million, and the charge-off rate was 6.15%, down 145 basis points from 7.6%.
The international cards unit held $8.2 billion in loans at the end of the quarter, up 9.3% compared with $7.5 billion last year.
“We expect that the acquisitions of ING Direct and the HSBC U.S. card business will deliver attractive financial results in the near future,” Richard Fairbank, Cap One chairman and CEO, said in a press release.
