Capital One Financial Corporation · NYSE:COF
Capital One Financial — Investor Day (November 2007)
20 slides from Capital One Financial's investor day presentation, Nov 6, 2007
Slide 1: Annual Investor Conference: Translating Business Performance into Shareholder Value
November 6, 2007 November 6, 2007 Annual Investor Conference Annual Investor Conference Translating Business Performance Translating Business Performance into Shareholder Value into Shareholder Value Exhibit 99.1
Slide 2: Forward-Looking Information
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 revise any of the informati
Slide 3: Performance and Trajectory, Disciplined Financial Management
Performance and Trajectory Disciplined Financial Management Translating business performance into shareholder Translating business performance into shareholder value value
Slide 4: Our shareholder value proposition begins with strong business franchises
Sustainable competitiveness at the right scale Attractive risk-adjusted returns over the cycle Our shareholder value proposition begins with Our shareholder value proposition begins with strong business franchises strong business franchises Strong Business Franchises
Slide 5: We will deliver shareholder value through sound corporate financial management
Capital Discipline Balance Sheet Strength Operating Efficiency We will deliver shareholder value through sound We will deliver shareholder value through sound corporate financial management corporate financial management
Slide 6: We will continue to drive efficiency improvements
40% 45% 50% 55% 2007 Estimate 2008 Outlook We will continue to drive efficiency improvements We will continue to drive efficiency improvements Capital One Operating Efficiency Ratio Managed Basis Mid-40s 1. Excludes restructuring charges and discontinued operations $100-$200M Y/Y OpEx Reduction 47%
Slide 7: The market recognizes our balance sheet strength and diversification
0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 The market recognizes our balance sheet strength The market recognizes our balance sheet strength and diversification and diversification 1. Source: Credit Suisse COF Top Tier Banks ¹ C
Slide 8: We maintained access to low cost capital markets funding through recent market turmoil
0% 1% 2% 3% 4% 5% 6% 7% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 We maintained access to low cost capital markets We maintained access to low cost capital markets funding through recent market turmoil funding through recent market turmoil 1. Indicative, all-in funding co
Slide 9: Excess capital is generated as returns exceed growth
Excess capital is generated as returns exceed Excess capital is generated as returns exceed growth growth Capital One ROTE and Asset Growth Rate 0% 10% 20% 30% 40% 50% 60% YTD ROTE ² 1. Calculated as Y/Y change in managed assets – in-period acquired assets 2. Excludes restructuring charges and disco
Slide 10: The capital generative power of our portfolio is enhanced by reduced capital need
7.0-7.5 Target 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2002-04 2007E TCE Target ($0.5) $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 2007E Excess Capital Generation The capital generative power of our portfolio is The capital generative power of our portfolio is enhanced by reduced capital need enhanced by reduced c
Slide 11: Capital Allocation Priorities
Capital Allocation Priorities We create value through disciplined capital We create value through disciplined capital allocation allocation Invest when and where conditions yield above-hurdle returns Provide steady income stream Maintain capital efficiency Share repurchases set risk-adjusted return
Slide 12: Performance and Trajectory, Disciplined Financial Management
Performance and Trajectory Disciplined Financial Management Translating business performance into shareholder Translating business performance into shareholder value value
Slide 13: 2008 Outlook
Commentary 2008 Outlook Even with cyclical credit headwinds, we will begin Even with cyclical credit headwinds, we will begin to demonstrate our longer-term trajectory in 2008 to demonstrate our longer-term trajectory in 2008 Loan/Deposit Growth Cautious approach to environment and focus on bank int
Slide 14: 2008 provision expense will be impacted by 2008 charge-offs and our 2009 outlook
Our current view of 2008 charge-offs is based on Allowance changes will be driven by multiple factors 2008 provision expense will be impacted by 2008 2008 provision expense will be impacted by 2008 charge-offs and our 2009 outlook charge-offs and our 2009 outlook • Current delinquency trends • Delin
Slide 15: Our allowance balances largely move with our credit outlook and changes in loans
-$200 -$150 -$100 -$50 $0 $50 $100 $150 $200 0% 1% 2% 3% 4% 5% Our allowance balances largely move with our Our allowance balances largely move with our credit outlook and changes in loans credit outlook and changes in loans U.S. Card Delinquency and Allowance Trends 30+ Delinquency Rate (managed) Q
Slide 16: Capital management actions will help mute the impact of cyclical credit headwinds in 2008
Capital management actions will help mute the Capital management actions will help mute the impact of cyclical credit headwinds in 2008 impact of cyclical credit headwinds in 2008 Current Operating Outlook for 2008 At Constant P/E 0% 1. Excludes restructuring charges and discontinued operations Oper
Slide 17: Strong business performance and capital discipline will drive returns over the cycle
Revenue Growth Operating Leverage Provision Impact Profit Growth Repurchase Impact EPS Growth Dividend Yield Implied Total Return Strong business performance and capital discipline Strong business performance and capital discipline will drive returns over the cycle will drive returns over the cycle
Slide 18: The U.S. Card business has produced strong profit growth and capital generation
Annual Investor Conference - The U.S. Card business has produced strong profit The U.S. Card business has produced strong profit growth and capital generation growth and capital generation 43.0% 44.0% 35.0% 31.0% 35.0% 37.0% 41.0% 43.0% 49.0% 0% 10% 20% 30% 40% 50% 60% YTD COF U.S. Card Capital Gene
Slide 19: Upside Opportunities: returns in Auto Finance need to improve
Upside Opportunities Annual Investor Conference - While historically positive, the returns are not where While historically positive, the returns are not where they need to be in Auto Finance they need to be in Auto Finance COF Auto Return on Allocated Capital 22% 30% 16% 20% 8% 0% 5% 10% 15% 20% 25
Slide 20: Overall, the GFS portfolio continues to deliver shareholder value
Annual Investor Conference - Overall, the GFS portfolio continues to deliver Overall, the GFS portfolio continues to deliver shareholder value shareholder value $65 $213 $186 $274 $276 $0 $50 $100 $150 $200 $250 $300 2007 YTD 15.5% 17.3% 21.0% 0% 5% 10% 15% 20% 25% 2007 YTD COF GFS NIAT COF GFS Retu