Capital One Financial Corporation · NYSE:COF
Capital One Financial — Q1 2004 Earnings Presentation
19 slides from Capital One Financial's earnings presentation, Apr 21, 2004
Slide 1: First Quarter 2004 Results
First Quarter 2004 Results April 21, 2004 First Quarter 2004 Results
Slide 2: Forward looking statements
Forward looking statements 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 informatio
Slide 3: Capital One is off to a great start in 2004
Capital One is off to a great start in 2004 • Generated $1.84 EPS in Q104 • Credit metrics continuing to improve • Diversification generating meaningful profits • Successful upmarket mix shift • Well hedged against a rising rate environment • Strong liquidity and capital position Capital One is well
Slide 4: Three trends are continuing to drive our metrics
Three trends are continuing to drive our metrics Mix Shift • Continuing to shift mix upmarket and beyond US Card Improving Economy • Recent improvement in consumer payment patterns Seasonality • First quarter typically strongest credit and earnings • EPS momentum from allowance reduction unsustainab
Slide 5: First quarter 2004 Financial Update
First quarter 2004 Financial Update Business Update
Slide 6: Solid business fundamentals are reflected in our Q104 results
Solid business fundamentals are reflected in our Q104 results $ Millions (except per share data) Q104 Q403 Q103 Managed Income Statement Highlights Total Revenue $ 2,691.6 $ 2,649.2 $ 2,535.9 Net Charge-offs 858.8 913.6 957.9 Allowance (Release) Build (100.0) 25.0 (85.0) Other 1.3 (0.6) (0.6) Provis
Slide 7: On-balance sheet credit improvement results in reduced Q104 allowance
On-balance sheet credit improvement results in reduced Q104 allowance On-Balance Sheet Loan Growth Reported loans increased 1% Improved Credit Quality Reported $30+ delinquencies decreased 20% Q104 Allowance Release of $100M First Quarter 2004 Results
Slide 8: 2004 return on assets should be relatively stable despite quarterly variability
As in recent years, 2004 return on assets should be relatively stable despite quarterly variability Managed ROA – Quarterly 1.63% 1.60% 1.53% 1.45% 1.39% 1.61% 1.42% 1.43% 1.77% 1.59% 1.45% 1.30% 2.11% Managed ROA—Annually 2001 1.54% 2002 1.49% 2003 1.52%
Slide 9: The mix shift drives down revenues and costs as a percentage of assets
The mix shift drives down revenues and costs as a percentage of assets, enabling stable annual ROA Revenue Margin 13.38% Expenses as % of Managed Loans Operating Expense 5.45% Provision 4.27% Marketing Expense 1.43%
Slide 10: We are hedged against a rising interest rate environment
We are hedged against a rising interest rate environment Net Interest Income (NII) Sensitivity* * As of 2/29/04 Interest Rate Shock Across the Yield Curve
Slide 11: We continue to build liquidity under strong capital markets conditions
We continue to build liquidity under strong capital markets conditions Available Liquidity $8.8 Untapped Conduit Capacity $9.1 Securities Cash & Equiv. $1.8 Unsecured $1.5 Credit Facilities Term Debt Maturities Card Securitization Unsecured Debt *Next Twelve Months, April 1, 2004 through March 31, 2
Slide 12: First Quarter 2004 Business Update
First Quarter 2004 Financial Update Business Update
Slide 13: Managed loans are on track for a mid-teens growth rate in 04
Managed loans are on track for a mid-teens growth rate in 2004 $ Billions Q104 Q104 3/31/04 12/31/03 3/31/03 Growth Growth1 US Card $ 45.3 $ 46.3 $ 38.7 $ (1.0) (8%) Global Financial Services 2 17.6 16.5 12.7 1.1 27% International 8.3 7.6 5.4 0.7 32% Installment Loans 5.7 5.4 4.6 0.3 24% Small Busin
Slide 14: All segments delivered solid profits, with US Card leading the way
All segments delivered solid profits, with the US Card segment leading the way Net Income After Tax * ($Millions) Q104 Q403 Q103 US Card $ 386.8 $ 322.7 $ 308.1 Auto Finance $ 30.7 $ 34.4 $(6.5) Global Financial Services $ 50.9 $ 3.3 $14.9 * Based on internal allocations of consolidated results. Fir
Slide 15: Charge-offs are expected to remain in the 4%'s for the remainder of 2004
Charge-offs are expected to remain in the 4%’s for the remainder of 2004 Monthly Managed Net Charge-off Rate 8% Quarterly: 6.21% 6.47% 6.32% 5.44% 5.32% 4.83%
Slide 16: Charge-offs improved across all segments in Q104
Charge-offs improved across all segments in Q104 Managed Net Charge-off Rate by Segment US Card Auto Global Financial Services
Slide 17: Delinquencies continued to decline in Q104
Delinquencies continued to decline in Q104 Monthly Managed $30+ Day Delinquency Rate
Slide 18: Our mix shift and a strong economy are driving delinquencies lower
Our mix shift and a strong economy are driving delinquencies lower Managed $30+ Day Delinquency Rate by Segment Auto US Card Global Financial Services
Slide 19: We're building Capital One for long-term success
We’re building Capital One for long-term success Diversified Businesses • Rigorous, conservative underwriting • Multiple products • Multiple geographies Strong Balance Sheet • Multiple funding sources • Strong liquidity and capital • Hedged against rising interest rates Stable, Profitable, Diversifi
Capital One Financial — Q1 2004 Earnings Presentation on 6ix