NEW YORK — Rising credit-card defaults are weighing on shares of Capital One Financial Corp.
The McLean, Va., company said in a regulatory filing with the Securities and Exchange Commission that its annual net charge-off rate rose to 9.77 percent last month from 9.32 percent in August.
That's the percentage of U.S. loans Capital One thinks won't be repaid.
Meanwhile, the rate for loans at least 30 days past due worsened for the third straight month. The delinquency rate rose to 5.38 percent in September from 5.09 percent in August. The delinquency rate is a signal of higher future defaults.
Losses on credit cards typically mirror joblessness. U.S. unemployment rose to 9.8 percent in September and is expected to rise into next year.
Other credit-card issuers are having problems, too: JPMorgan Chase & Co. said earlier this week that nearly 6 percent of its cardholders are at least 30 days delinquent, and it set aside nearly $5 billion to cover future unpaid bills. On Thursday, Citigroup Inc. said it was also hit badly by losses on private-label credit cards.
In a breakdown of its lending, Capital One said defaults in its auto loan unit rose to 4.58 percent last month from 4.31 percent in August, and the delinquency rate also rose to 9.52 percent from 9.42 percent.
http://www.google.com/hostednews/ap/article/ALeqM5g2K7XMBG7DE_Bd-f_X9Q0HnaqSTQD9BBMOTO0I hope these companies don't operate like banks. At a 10 percent charge-off rate, you are out of capital at just 10-to-1 leverage!
