S&P: Credit Ratings of Capital one Financial Unchanged Following Q3 2011 Results

October 24 00:00 2011

NEW YORK, October 24 (RainbowNewsLine.com) – Analysts at S&P’s Rating Services have reiterated their credit rating and outlook on Capital one Financial Corp. (BBB/Negative/–) after the company announced its Q3 2011 results.

Capital one Financial posted operating earnings of $865 million for Q3 that fell short of $945 million in 2Q 2011. These earnings were low due to higher expense provisions. Considering the growth in auto finance, commercial, and revolving card balances, the ending loan balances jumped by $987 million to reach $130 billion benchmark.  The company’s net asset margin continued to look strong, with asset quality trends kept improving as NCO’s in the seasoned domestic card portfolio rapidly declined for the sixth consecutive quarter, the analysts say. The company’s international credit card portfolio also improved with NCOs slumped from 7.02% to 6.15%. Moreover, Commercial banking too profited from improved credit quality while the auto portfolio saw some credit quality deterioration, the analysts add.

Improvement in capital metrics were in line with regulatory Tier 1 common ratio advancement from 13.7% of prior quarter to 14.9% of this quarter. The analysts note that Capital one’s S&P risk adjusted capital ratio also improved but remains lower and the S&P considers it as adequate (7%-10%).