Capital One Financial Corporation · NYSE:COF
Capital One Financial — Investor Presentation (February 2006)
16 slides from Capital One Financial's investor presentation, Feb 16, 2006
Slide 1: Forward looking statements
Forward looking statements Forward-Looking Information Please note that the following materials containing information regarding Capital One’s financial performance speak only as of the particular date or dates indicated in these materials. Capital One does not undertake any obligation to update or
Slide 2: Capital One has consistently translated great business strategies into financial success
Capital One has consistently translated great business strategies into financial success Financial discipline informs our strategic choices Strategic choices drive results Results build a solid financial foundation
Slide 3: We continue to apply financial discipline across the business
We continue to apply financial discipline across the business • Focus on long-term economics – NPV investment discipline – Prioritize long-term value over short-term metrics – Measured approach to market entry/exit • Disciplined risk management – Credit risk management at the core – Minimal interest
Slide 4: Our financial results reflect the evolution of our business
Our financial results reflect the evolution of our business 1994 - 2003 – Present • High growth • Investing to diversify assets, liabilities, and profits • Building a portfolio of businesses • Average managed ROA ~1.5% • Consuming capital • Moderate, sustainable growth • Diversified assets, liabilit
Slide 5: We have diversified assets
$0 $20 $40 $60 $80 $100 $120 Managed Outstandings We have diversified assets Global Financial Services $B $45 Auto Loans $60 $71 $80 U.S. Credit Cards $105.5 Hibernia Hibernia loans included in “other” category
Slide 6: As a Percentage of Average Managed Assets
As a Percentage of Average Managed Assets Revenue 16.92% 15.79% 13.68% 12.13% 11.59% Less Expense: Provision (4.69%) (5.96%) (4.75%) (3.55%) (3.48%) Operating Expense (7.15%) (5.72%) (5.00%) (4.45%) (4.11%) Marketing (2.60%) (1.74%) (1.49%) (1.49%) (1.31%) Tax (0.94%) (0.90%) (0.90%) (0.91%) (0.97%)
Slide 7: Our strategic choices have produced strong returns
Our strategic choices have produced strong returns 0% 5% 10% 15% 20% 25% 30% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% ROE ROA Tangible Capital/ Tangible Assets Ratio ¹ 6.30% 6.54% 6.01% 5.98% 7.17% 7.63% 9.24% 7.72% ROE ROA Managed Average Annual Returns Tangible Capital Rat
Slide 8: We have diversified funding
6% 7% 8% 9% 24% 25% 27% 27% 6% 7% 7% 9% 9% 36% 11% We have diversified funding Total Managed Liabilities and Capital 46% 46% 45% 43% 8% 7% 5% 5% 33% 7% 8% 8% 10% 5% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Off-Balance Sheet Securitizations Auto Securitizations Unsecured Debt Deposits Other Lia
Slide 9: Our fortified liquidity position provides funding flexibility and enables growth
Cash and Securities Cash and Securities Our fortified liquidity position provides funding flexibility and enables growth $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 Q3 05 Q4 05 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $B $B Available Liquidity Term Debt Maturities Untapped Conduit Capacity Card Secur
Slide 10: Our funding strategy continues to focus on diversified and resilient funding at the lowest cost
Our funding strategy continues to focus on diversified and resilient funding at the lowest cost • Funding choices reflect banking segment results and market conditions – Stronger than anticipated core deposit growth and relatively flat segment loan growth are creating near-term funding cost savings
Slide 11: We maintain minimal interest rate exposure
We maintain minimal interest rate exposure -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% Down 300 bps Down 200 bps Down 100 bps Base Case Up 100 bps Up 200 bps Up 300 bps Instantaneous Interest Rate Shock LIMIT 12/31/05 09/30/05
Slide 12: We are diversifying profits
U.S. Card -$100 $100 $300 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 We are diversifying profits Auto GFS Net Income (after tax) $M Impact from Hibernia ¹ $642 $899 $1136 $1543 $1809 1) Hibernia was included in the Other category; impact represents net income contributed by Hibernia in
Slide 13: We've built a portfolio of businesses that delivers strong returns today and positions us well for the future
Generating value today and capital to invest for tomorrow (e.g. U.S. Card, Banking in Louisiana) Delivering growth and returns (e.g. Auto Finance, Small Business, Home Loans) Fix or exit (e.g. France, Insurance Services) Building growth and future value (e.g. Texas de novo branches, GFS “development
Slide 14: We believe our businesses will continue to deliver strong results
We believe our businesses will continue to deliver strong results US Card Global Financial Services Auto Finance Banking • Strong profitability and returns • Modest loan and revenue growth • Growing profitability • Investments to build future earnings power • Strong revenue growth • Disciplined port
Slide 15: We are well positioned to deliver value to investors
We are well positioned to deliver value to investors Portfolio of Businesses Generates Strong Results Capital Generation Creates Flexibility Stable Annual Performance • Revenue growth • Credit performance • Operating leverage • Return on allocated capital • Invest in future growth and returns • Retu
Slide 16: Capital One delivers consistently strong returns
2006 Guidance • $7.40-7.80 diluted EPS • 7-9% loan growth • Continued stability in annual ROA EPS Growth ROE Managed ROA NIAT Growth Capital One delivers consistently strong returns EPS Growth 20% 20% 21% 21% 42% 42% 30% 30% 30% 30% 30% 30% 35% 35% 23% 23% 28% 28% 8% 8% ROE 23% 23% 23% 23% 25% 25% 2
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