The nation’s second largest bank credit card issuer, Capital One (COF) continues to lead its peers in all metrics for the first quarter (1Q/17). For the first time, COF released a historic breakdown of its near-prime and sub-prime FICO scores based on end-of-period (EOP) U.S. credit card outstandings, according to CardData.
COF reported 63% of its EOP outstandings had FICO scores above 660 while 37% had scores below 660. This compares to 65% and 35%, respectively for 1Q/16.
COF posted high single digit year-on-year (YOY) gains in outstandings (OUT) and purchase dollar volume (PDV) for 1Q/17.
However, the charge-off (CO) ratio has been steadily rising and remains well above industry averages, reflective of its “lower-prime” cardholder base. Furthermore, COF credit card margins have been falling.
COF U.S. card revenue rose 7.4% YOY to $3792 million, compared to $3881 million in the prior quarter and $3530 million for the year ago quarter. For 2016, COF averaged $3672 million per quarter.
COF card income sank 50.7% YOY to $278 million, compared to $505 million in the prior quarter and $564 million for the year ago quarter. The decline was attributed to higher reserves for charge-offs. For 2016, COF averaged $515 million per quarter.
End-of-Period (EOP) U.S. credit card outstandings increased by 7.7% YOY. At the end of 1Q/17 COF had $91.1 billion in U.S. EOP credit card outstandings, compared to $97.1 billion at the end of the prior quarter and $84.6 billion at the end of the year ago quarter.
Average U.S. credit card outstandings increased 9.3% YOY. During the first quarter COF had $93.0 billion in U.S. average credit card OUT, compared to $92.6 billion for 4Q/16 and $85.1 billion for 1Q/16.
COF U.S. credit card PDV jumped 7.0% YOY to $67.0 billion, compared to $75.6 billion for 4Q/16 and $62.6 billion for 1Q/16.
COF U.S. card delinquency declined sequentially and rose YOY, in 1Q/17.
COF U.S. consumer credit card 30+ day delinquency increased 62 basis points (bps) YOY, and down 30 bps Quarter-To-Quarter (QTQ) for 1Q/17. The issuer reported a 30+ day DEL ratio of 3.71% for 1Q/17, compared to 3.93% for 4Q/16 and 3.09% for 1Q/16. (COF does not report 90+ day delinquency)
The COF U.S. consumer credit card charge-off (CO) ratio for 1Q/17 was up 98 bps YOY and up 48 bps QTQ.
The issuer reported a charge-off ratio of 5.14% for 1Q/17, compared to 4.66% for 4Q/16 and 4.16% for 1Q/16.
The COF U.S. credit card average yield (YLD) was up 10 bps QTQ, and up 58 bps YOY. For 1Q/17 the yield was 15.01%, compared to 14.91% for 4Q/16 and 14.43% for 1Q/16.
COF U.S. credit card net revenue margin (NRM) was down 46 bps QTQ and down 28 bps YOY. For 1Q/17 the NRM was 16.30%, compared to 16.76% for 4Q/16 and 16.58% for 1Q/16.
CAPITAL ONE U.S. CARD PORTFOLIO
1Q/16: $3530 million
2Q/16: $3561 million
3Q/16: $3715 million
4Q/16: $3881 million
1Q/17: $3792 million
1Q/16: $564 million
2Q/16: $463 million
3Q/16: $527 million
4Q/16: $505 million
1Q/17: $278 million
CARD EOP OUT
1Q/16: $84.6 billion
2Q/16: $88.6 million
3Q/16: $91.0 million
4Q/16: $97.1 million
1Q/17: $91.1 million
CARD AVG OUT
1Q/16: $85.1 billion
2Q/16: $86.0 billion
3Q/16: $89.8 million
4Q/16: $92.6 million
1Q/17: $93.0 million
1Q/16: $62.6 billion
2Q/16: $71.1 billion
3Q/16: $71.3 billion
4Q/16: $75.6 billion
1Q/17: $67.0 billion
CARD 30+ DEL
CARD AVG YLD
NRM – Calculated based on annualized interest income for the period divided by average loans held for investment during the period for the specified loan category. Annualized interest income excludes various allocations including funds transfer pricing that assigns certain balance sheet assets, deposits and other liabilities and their related revenue and expenses attributable to each business segment.
Source: Capital One