Canaccord Genuity Morning Coffee on Capital One Financial: Turn Your Head and COF
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Price: $212.48 -3.74%
Rating Summary:
28 Buy, 14 Hold, 2 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
28 Buy, 14 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Canaccord Genuity Morning Coffee on Capital One Financial (NYSE: COF): Turn your head and COF.
Capital One reported monthly credit numbers - losses in dollars and loss rates were down all three segments of Domestic Card, International Card, and Auto. This reverses last month's increase in Card losses. Overall the quarter-to-date loss rates are tracking in line with Credit Suisse’s estimates of improved Q1/12 loss rates relative to Q4/11. February day count accounts for some of the loss improvement but the brokerage notes that delinquencies improved as well. Domestic Card losses were down 8% month-over-month h in dollars to $173 million and 24 bps to 3.84%. Delinquencies decreased 16 bps month-over-month to 3.62% and 7% in dollars to $1.9 billion. This ends eight consecutive months of increases in Domestic Card dollar delinquencies. Both average and EOP loan balances contracted 3% month-over-month to $54.0 billion and $53.5 billion, respectively. International Card losses were down 3% to $38 million and the loss rate was down 21 bps to 5.43%. Delinquencies ticked up 2% to $440 million and 6 bps to 5.25%. Auto finance showed improvements likely due to seasonality to $24 million in losses, down 40% in dollars, and the loss rate declined 88 bps month-over-month to 1.29%. Delinquencies dropped 167 bps month-over-month to 5.61%. The loss rates for U.S. Card are tracking in line with Credit Suisse’s 3.96% loss rate estimate for Q1. Capital One does not expect further meaningful credit quality improvements – only seasonal patterns. COF was one of the first card issuers to show increases in delinquencies and losses. Capital One managed credit quality and the CARD Act well over the recent economic cycle; but heightened competition among card issuers and integration risk from recent deals keep Credit Suisse on the sidelines, maintaining their neutral rating.
Capital One reported monthly credit numbers - losses in dollars and loss rates were down all three segments of Domestic Card, International Card, and Auto. This reverses last month's increase in Card losses. Overall the quarter-to-date loss rates are tracking in line with Credit Suisse’s estimates of improved Q1/12 loss rates relative to Q4/11. February day count accounts for some of the loss improvement but the brokerage notes that delinquencies improved as well. Domestic Card losses were down 8% month-over-month h in dollars to $173 million and 24 bps to 3.84%. Delinquencies decreased 16 bps month-over-month to 3.62% and 7% in dollars to $1.9 billion. This ends eight consecutive months of increases in Domestic Card dollar delinquencies. Both average and EOP loan balances contracted 3% month-over-month to $54.0 billion and $53.5 billion, respectively. International Card losses were down 3% to $38 million and the loss rate was down 21 bps to 5.43%. Delinquencies ticked up 2% to $440 million and 6 bps to 5.25%. Auto finance showed improvements likely due to seasonality to $24 million in losses, down 40% in dollars, and the loss rate declined 88 bps month-over-month to 1.29%. Delinquencies dropped 167 bps month-over-month to 5.61%. The loss rates for U.S. Card are tracking in line with Credit Suisse’s 3.96% loss rate estimate for Q1. Capital One does not expect further meaningful credit quality improvements – only seasonal patterns. COF was one of the first card issuers to show increases in delinquencies and losses. Capital One managed credit quality and the CARD Act well over the recent economic cycle; but heightened competition among card issuers and integration risk from recent deals keep Credit Suisse on the sidelines, maintaining their neutral rating.
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