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Capital One Financial, a credit-card issuer and bank, posted a fourth-quarter loss Thursday after writing down the value of its auto finance business, and set aside more money to cover bad loans.
Its shares fell 6.6 percent in post-market trading.
The McLean, Virginia-based company swung to a fourth-quarter net loss of $1.4 billion, or $3.74 per diluted share, compared with net income of $226.6 million, or 60 cents per diluted share, a year earlier.
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AP |
The company, one of the largest issuers of MasterCard [MA
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] and Visa [V
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] credit cards, recorded a noncash impairment of goodwill of $810.9 million related to the revised outlook for its auto finance business.
The company set aside another $1.0 billion for loan losses, anticipating a further deterioration of its credit portfolio that is under pressure as unemployment rises.
"The economic downturn was the key driver of our fourth quarter ... and we expect that the recession will continue to impact our results throughout 2009,'' said Richard Fairbank, Capital One's chairman and chief executive, in a statement.
In the U.S. card business, charge-offs—a measure of consumer default—increased to 7.08 percent in the fourth quarter from 6.13 percent in the third quarter.
The company expects loan losses from U.S. cards to increase to 8.1 percent in the first quarter.
Total revenue fell 19 percent to $3.17 billion, while deposits rose to $108.6 billion at the end of the period.
Capital One once specialized in credit cards, but expanded into branch banking in recent years after acquiring Louisiana's Hibernia and New York's North Fork Bancorp. Among its major card rivals are American Express [AXP
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] Bank of America [
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] Citigroup [C
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] and JPMorgan Chase [JPM
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].
The company agreed last month to buy Chevy Chase Bank for $520 million, expanding its retail deposit base in the affluent suburbs of Washington.
The bank posted a full-year net loss of $46 million, or 21 cents per share, compared with net income of $1.6 billion, or $2.28 per share, in 2007.
Capital One's shares [COF
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] fell to below $20 in after-hours trading. The stock closed down 4.4 percent to $21.94 on the New York Stock Exchange.
The stock has dropped about 32 percent this year, while the KBW Bank Index has fallen 38 percent.
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