Capital One Financial Corp., an issuer of MasterCard and Visa credit cards, said Friday U.S. credit card defaults fell in April as the company changed its customer bankruptcy accounting.
In a regulatory filing, the company said the annualized net charge-off rate for U.S. credit cards — debts the company believes it will never collect — fell to 8.56 percent in April from 9.33 percent in March.
Under the accounting change, Capital One is waiting longer to declare the debts of bankrupt customers uncollectable.
The company said the change has improved its charge-off rate by 60 basis points. Excluding the change, defaults were in line with March data.
In addition, the rate for loans at least 30 days delinquent fell slightly to 5.04 percent from 5.08 percent.
Capital One reported a higher-than-expected first-quarter loss last month, hurt like most of its rivals by growing credit losses and higher provisions for bad loans. It was the second quarterly loss for the company.
U.S. regulators have decided, however, that the bank is sufficiently capitalized to face a deeper recession, after having it undergo a "stress test."
Following the test, Capital One sold $1.55 billion of stock to repay the $3.55 billion it received from the government’s bank bailout program.
For U.S. auto loans in April, Capital One’s charge-off rate fell to 3.46 percent in April from 4.08 percent in March, while the delinquency rate rose to 7.81 percent from 7.52 percent.
In international operations, including Canada and Britain, the charge-off rate for all loans rose to 8.91 percent in April from 8.67 percent in March, while the delinquency rate rose to 6.43 percent from 6.25 percent.
The company once specialized in credit cards but expanded into branch banking in recent years after acquiring Hibernia Corp and North Fork Bancorp Inc. More recently, the acquisition of Chevy Chase Bank expanded its presence in the affluent suburbs of Washington, D.C.
Capital One’s shares rose 2.5 percent to $25.20 in premarket trading. The stock, which is down 21 percent this year, has more than tripled in price in the past two months, coming off a 13-year low.
