Capital One Financial Corporation · NYSE:COF
Capital One Financial — Q2 2010 Earnings Presentation
17 slides from Capital One Financial's earnings presentation, Jul 22, 2010
Slide 1: Second Quarter 2010 Results
Exhibit 99.2 Second Quarter 2010 Results July 22, 2010
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: Second quarter earnings were $608MM or $1.33 per share
Second quarter earnings were $608MM or $1.33 per share, compared to $636MM or $1.40 per share in the first quarter Q210 Q110 Change Highlights $MM • Income from continuing operations up 13% quarter over quarter Net Interest 3,097 3,228 (131) Non Interest Income Income 807 1,061 (254) • Revenue decli
Slide 4: The pace of loan contraction slowed in the quarter and funding costs continued to improve
The pace of loan contraction slowed in the quarter and funding costs continued to improve End of Period Assets1 Asset $B Highlights Cash & Cash • Consumer/Card loans down $3.0B or 2.3% Equivalents – $2.0B decline in run-off portfolios Securities – Charge-offs still elevated at $1.7B Other • Commerci
Slide 5: Allowance coverage ratios remain high
Allowance coverage ratios remain high Allowance Allowance as % of Balance Loans $MM Credit Card Consumer Banking Commercial Banking Total Company: 4.43% 4.44% 4.67% 4.55% 5.96% 5.36% Allowance as % of Commercial Lending Allowance as % of Reported 30+ Non-Performing Loans Delinquencies Domestic Card
Slide 6: Our capacity to absorb risk remains high
Our capacity to absorb risk remains high Tangible Common Equity + Allowance to Tier 1 Capital to Tangible Managed Assets Risk Weighted Assets 13.8% 11.9% 9.7% 9.8% 8.5% 8.4% 9.9% 9.6% Allowance Other Tier 1 6.2% 6.3% 6.1% 5.5% TCE Common July 22, 2010 6
Slide 7: NIM remained stable in the quarter
NIM remained stable in the quarter, as modest funding cost improvements were offset by modest declines in asset yield Margins as % of Managed Assets Funding costs improved modestly • Favorable interest rates Revenue Margin • Mix shift from wholesale funding to bank deposits Asset yields declined mod
Slide 8: Loan balances continued to decline, but at a slower pace
Loan balances continued to decline, but at a slower pace Domestic Commentary Card $B • Expected run off continues in ILs, Mortgages, and Installment Small ticket CRE Loans • Consumer and Commercial demand remains weak Partially offset by: Domestic Card • Lower charge-offs • Pockets of origination gr
Slide 9: Charge-off rates improved across our consumer lending businesses
Charge-off rates improved across our consumer lending businesses Domestic Credit Card International Credit Card ($55.3B*) ($7.4B*) Net Charge-off Rate Net Charge-off Rate 30+ Delinquency Rate 30+ Delinquency Rate Mortgage Credit Auto Credit ($17.3B*) ($13.6B*) 30+ Delinquency Rate 30+ Delinquency Ra
Slide 10: Commercial Banking non-performing asset rates and charge-off rates improved
Commercial Banking non-performing asset rates and charge-off rates improved Total Commercial Lending Total Commercial Banking ($29.6B*) Excluding Small Ticket CRE ($27.6B*) Non Performing Non Performing Asset Rate Asset Rate Charge-off Rate Commercial & Multi Family Middle Market ($10.2B*) ($13.6B*)
Slide 11: We remain well positioned to deliver significant shareholder value over the long term
We remain well positioned to deliver significant shareholder value over the long term Elevated Uncertainty Near-Term Trends Long-Term Value • Fragile economic recovery • Expect lower pre- • Businesses with provision earnings into sustainable, above- • Consumer demand 2011 hurdle returns • Regulatory
Slide 12: Appendix
Appendix July 22, 2010 12
Slide 13: Domestic Card profits increased, as lower provision expense offset lower pre-provision earnings
Domestic Card profits increased, as the decline in pre-provision earnings was more that offset by lower provision expense Domestic Highlights Card Q2 2010 Q1 2010 Q2 2009 (in millions) • Pre-provision earnings declined, as Earnings expected Lower loan balances Net interest income 1,735 1,865 1,586 E
Slide 14: International Card businesses posted another quarter of solid profitability
The International Card businesses posted another quarter of solid profitability, with stable revenue and improving credit metrics International Highlights Card Q2 2010 Q1 2010 Q2 2009 (in million) • Revenues relatively stable, with modest Earnings pressure from FX movements Net interest income 242 2
Slide 15: Commercial Banking business returned to profitability
The Commercial Banking business returned to profitability, with increasing revenue and sharply lower provision expense Commercial Highlights (in millions) Banking Earnings Q2 2010 Q1 2010 Q2 2009 • Revenues increased modestly Net interest income 319 312 279 NII up, driven by growth in average Non-in
Slide 16: Consumer Banking net income was flat
Consumer Banking net income was flat, as the decline in pre-provision earnings was cushioned by lower provision expense Consumer Highlights (in millions) Banking Earnings Q2 2010 Q1 2010 Q2 2009 • Revenues declined Net interest income 935 896 826 NII up modestly, with growth in Non-interest income 1
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