Capital One Financial (COF) Delinquency Metrics Reverse Back Up

After a short respite, Capital One Financial's (COF) delinquency metrics degraded again. While the market treasts COF as if it is American Express (AXP) there is a difference between the two. Unfortunately this is a "student body left" environment where almost all companies in a sector are treated the same. Now it was not a huge jump but it shows "2nd derivative improvement" is not a keen theory among US consumers. The stock is down a whopping 2.7% off the news ... of course John Paulson disclosed a bigger stake in the name so that will help. Car loans weakened significantly. Canadian loans approaching US levels of deliquency? hmm

In the bigger picture - these credit card figures from COF represent middle America far more than Amex does.

Via Reuters

• Capital One Financial Corp's (COF) U.S. credit-card defaults and delinquencies rose in July, as more Americans lost jobs and struggled to pay their debts.
• The trend differs from American Express Co's comments earlier this month, when the largest U.S. credit-card company by sales announced defaults declined in July for a second straight month and said it saw the first signs of improvement in the industry in 18 months.
• In a regulatory filing on Monday, Capital One said the annualized net charge-off rate for U.S. credit cards -- debts the company believes it will never collect -- increased to 9.83 percent in July from 9.73 percent in June.
• Capital One, one of the largest issuers of Visa and MasterCard credit cards, said accounts at least 30 days delinquent -- an indicator of future loan losses -- inched up to 4.83 percent from 4.77 percent.
• For U.S. auto loans, Capital One's charge-off rate rose to 4.26 percent in July from 3.89 percent in June, and the delinquency rate increased to 9.22 percent from 8.89 percent.
• In international operations, including Canada and Britain, the charge-off rate went up to 9.76 percent in July from 9.26 percent in June, while the delinquency rate fell to 6.68 percent from 6.69 percent.

We'll see if the rest of the companies report similar numbers or if COF is an outlier in the group.

• Earlier this month, rival card issuer American Express Co. said its rate of losses from credit card loans was slowing. The write-off rate on card balances fell to 9.2 percent in July from 10 percent during the second quarter, the company said.

Remember, American Express has reduced its outstanding credit much more aggressively than peers. [Apr 24: American Express Not too Shabby Earnings; It's Not Capital One Financial (COF) or Discover Financial (DFS)] Two different companies


The efforts earned AmEx some bad press for its hard-nosed tactics but enabled the company to reduce its U.S. credit-card receivables total (the denominator of the charge-off data) to $57.8 billion at the end of February from $65.9 billion at year-end 2007.

[Apr 15: Capital One (COF) Defaults Continue Their Upward March]

Short Capital One Financial in fund; no personal position