Capital One Posts Third-Quarter Profit
From staff and wire reports
Capital One posted a third-quarter profit of $374.1 million ($1 a share), compared with a loss of $81.6 million (21 cents) in the comparable period a year earlier on expenses tied to closing its subprime mortgage unit. The McLean credit card issuer and bank said revenue was $3.5 billion, down from $3.77 billion.
Capital One said in a statement that during the quarter it built its allowance for loan losses by $208.6 million, bringing it to $3.5 billion. Deposits as of Sept. 30 were $98.9 billion, up 19 percent.
"Against the backdrop of increasing economic headwinds and unprecedented change in the financial services landscape, Capital One continues to deliver profits and generate capital," said CEO Richard D. Fairbank. "But we are not complacent. Based on what we're seeing in the world around us, we are significantly increasing the intensity of our efforts to aggressively manage the company for the benefit of investors and customers through the current downturn."
Capital One's reserves could absorb about $7.2 billion in soured loans in the year through September 2009, the company said last month. The lender raised $686 million last month in a common stock offering to shore up its balance sheet.
"Earnings will remain under pressure as the overextended consumer will have difficulty meeting his debt obligations," said Scott Valentin, analyst at Friedman Billings Ramsey & Co., yesterday in a research note. He rates the company "underperform."
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