Capital One Card Volume Grows 7%, Amortization Rate Is 6%

The capital‘s fourth-quarter results, released after the market closed on Tuesday (January 21), indicated that consumers are continuing to spend on their cards and stripping out once items, the credit score was flat along several measures.

The the company’s earnings release revealed that the amount of card purchases increased by 7% to 172.9 billion

The reported net depreciation rate was 6%, where this rate had been 5.3% a year ago.

managing director Richard Fairbank said on the call that the domestic card business “delivered another quarter of steady top line growth, strong margins and stable credit.” Average loans were 6% higher and network charging the rate was bumped 0.4% higher as a result of the end of the company’s Walmart card partnership and a loss sharing agreement with the company in question.

Fairbank added that Capital One’s 30 days plus crime rate crossed to actual year over year improvement. The 30 days plus the crime rate at the end of December was 4.53%, down 0.08% basis points from a year earlier.

Strong Consumer Banking results

Elsewhere, in the consumer banking industry, car production was up 53% over previous years neighborhood.

“Part of this growth can be attributed to overall market growth, while the rest is the result of our strong position to pursue robust growth in the current marketplace,” said Fairbank.

“As a reminder, our choice to tighten credit and pull back in anticipation of credit score inflation and declining vehicle values ​​was still in effect in the fourth quarter of 2023, resulting in relatively low originations.”

Overall, closing loans within the consumer banking portfolio increased by 4% year over year. Consumer deposits rose 7% at the end of the quarter to $318.3 billion.

Later in the call, Fairbank said “consumer credit trends remain stable.”

Shares of Capital One were down about 1% after the close on Tuesday.

Elsewhere during call, Fairbank said the acquisition of Discover Financial Services remains on track and is scheduled to close early this year.

The state of the consumer

Asked during the call about consumer consumptionFairbank said, “The American consumer continues with be a source of strength in the overall economy. The labor market remains strong and we saw signs of softening in the first half of the year 2024but in the second half of the year unemployment has been stable and job creation data has shown renewed strength. Incomes are growing steadily in real terms as inflation… settles a little.

“Consumer debt service burdens are stable, close to pre-pandemic levels. Consumers have higher bank account balances than before the pandemic.” There have been “pockets of pressure” on consumers whose incomes have not kept pace with inflation, he said, which could lead to some “delayed billing” among some consumers.

He noted: “The proportion of customers who only pay the minimum payment is also somewhat overstated pre-pandemic levels. … We see this minimum payment effect across this credit spectrum. I’m not making a comment here about the low end of the market or even about subprime. Actually if anything, the lower end seems to fare relatively better at the moment.”