Capital One international card gross revenue was flat in the first-quarter (1Q/19) while after-tax net income sunk 44% year-on-year (YOY). International credit card purchase dollar volume (PDV) was up nearly 3% as 1Q/19 end-of-period (EOP) outstandings slipped by 3% YOY.
Capital One [COF] issues credit cards in Canada and the United Kingdom, internationally. COF international credit card portfolio metrics were moderate as charge-offs declined sharply from the prior quarter, due to seasonality, and net revenue margin remained solidly above 16%, according to analysis by RAM Research.
COF gross revenues for the international card business edged down 0.4% YOY in 1Q/19 to $394 million, compared to $366 million for 4Q/18, and $412 million for 1Q/18. COF net income for the international card business declined by 44.0% YOY in 1Q/19 to $56 million, compared to -$9 million for 4Q/18, and $100 million for 1Q/18, according to figures collected by CardData.
COF International Card Portfolio Growth
PDV, excluding cash advances and balance transfers, for COF’s international card business, not currency adjusted (NFX) for the first-quarter rose 2.7% YOY to $7.5 billion, compared to $8.9 billion in the prior quarter, and $9.0 billion for the year ago quarter. In 1Q/18 COF international PDV rise 17.7% YOY.
EOP outstandings for COF’s international card business for 1Q/19 decreased 2.9% YOY (NFX) to $8.78 billion, compared to $9.01 billion for 4Q/18, and $9.04 billion for 1Q/18.
Average outstandings for COF’s international credit card business for 1Q/19 declined 2.9% YOY (NFX) to $8.79 billion, compared to $8.96 billion for 4Q/18, and $9.05 billion for 1Q/18.
COF International Card Performance Metrics
Early stage delinquency (30+ days) increased by nine basis points (bps) from the prior quarter, and down one bps YOY. For 1Q/19 COF reported international credit card delinquency of 3.61%, compared to 3.52% for the prior quarter, and 3.62% for the year ago quarter.
COF international credit cards charge-offs collapsed 102 bps from 4Q/18 and up 71 bps YOY. For 1Q/19, COF reported posted a charge-off ratio of 3.20%, compared to 4.22% for 4Q/18 and 2.49% for 1Q/18.
Average yield (annualized interest income divided by average loans) for the COF global card portfolio rose 53 bps YOY and 14 bps from 4Q/18. COF reported an average yield of 15.77% for the first quarter, compared to 15.63% for the prior quarter, and 15.24% for the year ago quarter. COF ceased reporting international yield from 2Q/16 onward.
Total interest margin (annualized total net revenue divided by average loans) for the COF international credit card portfolio ramped-up by 26 bps from the prior quarter, and 16 bps YOY. COF posted a total interest margin of 16.29% for 1Q/19, compared to 16.03% for 4Q/18, and 16.13% for 1Q/18. COF ceased reporting international margin from 2Q/16 onward.
Overall COF International Q1 Performance
Overall, COF international credit card metrics mirror the performance metrics of other U.K. and Canada credit card issuers. With respect to gross income the four-year CAGR (compound annual growth rate) is 5.50%. While PDV and outstandings YOY growth was soft, the CAGR remains solid at 8.56% and 3.61%, respectively, notes Robert McKinley, Senior Analyst of CardFlash, CardData and CardTrak.