Capital One posts first profit in a year

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NEW YORK -Capital One Financial Corp. on Thursday posted its first quarterly profit in a year, boosted by sales in its investment portfolio and lower funding costs.

The McLean, Va., company, one of the largest U.S. credit card issuers, had net income of $425.6 million, or $0.94 per share, compared with net income of $374.1 million, or $1 per share, in the year-ago quarter. Analysts surveyed by Thomson Reuters were expecting a profit of $0.14 per share.

Net interest income from loans rose to $2.1 billion from $1.8 billion a year earlier. Non-interest income from fees and other sources declined to $1.6 billion from $1.7 billion.

Consumers are still having trouble keeping up with their bills. The company said U.S. credit card delinquencies of 30 days or more rose to 5.38 percent from 4.2 percent in the year-ago quarter. International card delinquencies also rose. The late payments are tied to rising unemployment rates.

The charge-off rate for both international and domestic credit cards rose to 9.59 percent from 6.1 percent a year ago, which reflects loans Capital One no longer expects will be paid back. The company set aside $1.17 billion to cover losses on bad loans, up from $1.09 billion a year ago.

Other credit-card issuers, including JPMorgan Chase and Citigroup, recently reported higher rates of late payments on credit card bills. On Thursday after the closing bell, larger credit card issuer American Express posted its eighth straight quarter of falling profits.

Capital One's marketing expenses and the tax rate the company paid both declined from last year, helping the bottom line.

Shares rose $2.97 to $41.30 in after-hours trading. They rose $1.70 to $38.33 in regular trading.

2009-10-22 17:46:46