Capital One Reports 4th Quarter Loss
Shares in Capital One Financial Corp. (parent company of credit card giant Capital One) reported a 4th quarter net loss of $1.4 billion. That represents a $3.74 loss per share. Share prices sold off in after-hours trading on the news to a low of $20.50 before settling at $21.94 per share. That is a 4.4% decline in share value on the day.
The big culprit here is the writing down of its auto loan business. They also set aside additional funds to cover future losses on loans that are in, or are expected to be in, default. The company expects the economy to weaken further and unemployment to rise.
There really doesn’t appear to be any relief on the horizon either. Capital One chairman Richard Fairbank expects the recession to last through 2009. Credit card giant Capital One recently expanded into branch banking by acquiring Hibernia and North Fork Bancorp. It has also agreed to buy Chevy Chase Bank for a reported $520 million.
Capital One is certainly not alone in their misery. Other credit card companies including American Express, J.P. Morgan Chase, Citigroup and Bank of America are all bracing for more consumer defaults in the months ahead.
This is becoming such a cliche by now but I’m afraid I have to say it – things are going to get worse before they get better. Hang in there though, things will get better. After all, this is the United States of America.
Related Information:
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