Cap One’s Auto Delinquencies, Charge-Offs Up in August

Auto-loan delinquencies rose in August to 5.79% from 5.75% at Capital One Financial Corp., but it wasn’t the only such increase the company saw last month.

A filing with the Securities and Exchange Commission stated that the rate for Capital One’s 30-day delinquencies on its U.S. credit cards jumped to 3.37% from 3.09% in July, though charge-offs, loans that the banks do not expect to be able to collect, were lower than the previous month, falling to 2.58% from 2.62%.

Auto financing charge-offs, however, were up to 1.84% from 1.54%.

Tags: Capital, Corp, Financial, One, auto delinquencies, charge-offs

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Comment by Chas Roscow on September 18, 2012 at 11:52am: Losses are 1.84%. If the average weighted coupon mirrors the prime industry, it is around 6%. This leaves little margin to cover variable expenses and fixed overhead allocation. Not sure but it is possible that the ROA is under 1%. This is the price a lender pays to pursue a goal of "the largest auto lender in the US" instead of the most effective/profitable one. The bigger issue is their credit losses are high when most lenders are experience the lowest levels of net charge-off in 15 years. COF is clearly a successful company. I'm sure they can foster a fix. Controlling credit losses is simple with the right tools in place.