Last Tuesday, January 21, Capital One published information on the results of its activities for the fourth quarter of 2024.
The mentioned information from the specified financial institution, which is headquartered in the state of Virginia, indicates that consumers continue to spend money on their cards, and if strip out one-time items, credit performance is flat along several metrics.
According to the bank’s earnings supplements, card purchase volumes grew by 7% year-on-year in the fourth quarter of 2024. In monetary terms, the corresponding figure was $172.9 billion.
The net charge-off rate in the fourth quarter of last year was 6%. For the same period in 2023, the corresponding figure was recorded at the 5.3% mark.
Capital One chief executive officer Richard Fairbank stated that the domestic card business has demonstrated another quarter of steady top-line growth, strong margins, and stable credit.
Average loans were 6% higher and the net charge-off rate was bumped 0.4% higher as a result of the end of the bank’s Walmart card partnership and a loss-sharing agreement with that company.
Richard Fairbank noted that Capital One’s 30-day-plus delinquency rate actually improved year-on-year. The 30-day-plus delinquency rate as of the end of December was 4.53%. This indicator is 0.08% lower than the figure recorded a year earlier.
Elsewhere, in the consumer banking business, auto originations were up 53% year-on-year.
The financial institution’s net income for the fourth quarter of 2024 was $1.1 billion. This indicator increased by 55% year-on-year.
The financial institution’s revenue for the last quarter of 2024 was recorded at the $10.2 billion mark. This indicator showed an increase of 2% year-on-year.
Capital One noted that in the fourth quarter of 2023, it decided to tighten the terms of lending and pull back in anticipation of credit score inflation and a decrease in vehicle values, resulting in relatively low originations.
In general, in the consumer banking portfolio, the ending loans increased by 4% year-on-year. At the end of last quarter, the volume of consumer deposits rose by 7% compared to a year ago, amounting to $318.3 billion.
Richard Fairbank stated that tendencies in the consumer lending area remain stable.
On Tuesday, the value of Capital One shares fell by about 1% after hours.
Richard Fairbank also stated that the deal to acquire Discover Financial Services is ongoing and it is expected that it will be closed early the current year.
Moreover, the head of Capital One noted that the US consumer continues to be a source of strength for the economy as a whole. Apart from that, he stated that the labor market remains strong, mentioning that there were signs of its softening in the first half of 2024, but then the unemployment rate was stable and data on job creation has shown renewed strength. According to him, incomes are steadily rising in real terms as inflation settles a bit.
Richard Fairbank said that the burden of servicing consumer debt remains stable and reached the level seen before the coronavirus pandemic. According to him, consumer bank account balances are already higher than before the mentioned pandemic. He noted that there are pockets of pressure on consumers whose incomes have not been kept up with inflation. According to him, this may lead to some delayed charge-offs among some consumers. Richard Fairbank separately noted that the proportion of customers making just the minimum payment is also running somewhat above the level seen before the coronavirus pandemic.
As we have reported earlier, JPMorgan UK Digital Bank Introduces First Credit Card.
