Capital One's Q4 2023 Financial Performance and Credit Trends
2024-01-30
Capital One recently held its Q4 2023 earnings call, with Jeff Norris, the senior vice president of finance, as the speaker. Other participants in the call included Richard Fairbank, Capital One's chairman and CEO, and Andrew Young, the CFO. Participants were able to access the call on Capital One's website.
During the fourth quarter of 2023, Capital One reported earnings of $706 million, or $1.67 per diluted common share. For the full year of 2023, the company earned $4.9 billion, or $11.95 per share. It's important to note that the results for the fourth quarter included a $289 million accrual for the FDIC special assessment.
In terms of financial performance, period-end loans increased by 2% and period-end deposits increased by 1% during the quarter. Non-interest expense saw an 18% increase, while operating expense increased by 15%. The allowance balance increased by $326 million, resulting in a total company coverage ratio of 4.77%. The coverage ratio in the domestic card business decreased by 16 basis points to 7.63%, while the coverage ratio in the consumer banking segment increased by four basis points to 2.71%. The coverage ratio in the commercial banking business declined by three basis points to 1.71%.
The charge-off rate for the company was 4.61%, with a sequential-quarter increase of 95 basis points. In December, the charge-off rate was 5.78%, which would have been 5.63% if adjusted for a one-time impact. Delinquency rates remained stable since August, tracking with normal seasonality and remaining stable relative to the same months in 2018 and 2019.
Looking ahead, Capital One expects charge-offs to move with seasonality in the coming months. They also discussed potential factors that could impact charge-offs in the longer run, such as regulatory changes and the path of credit. The company emphasized its focus on technology, marketing investments, and delivering long-term shareholder value. They highlighted their tech engine, positioning in the marketplace, and commitment to simplicity and customer experiences.
During the earnings call, Capital One also addressed concerns about the impact of the CFPB late fee proposal, the auto business, and credit performance. They discussed their strategies for managing credit risk, recovery rates, and provided an outlook for different segments of the market.
Overall, Capital One's Q4 2023 earnings call covered a range of important business topics, including financial performance, credit trends, marketing investments, technology, and the company's outlook for the future.