Capital One Financial Corp. reported losses in its credit card portfolio were relatively stable, prompting differing interpretations from analysts who track the lender.
The McLean, Va.-based lender, in a Securities and Exchange Commission filing, said it wrote off $342.3 million from its $67.87 billion credit-card portfolio in April. At this rate, the company is writing off 6.1 percent of its loans annually.
Goldman Sachs analyst Brian Foran said the performance was as expected, or maybe a little better. People who are bearish on Capital One expect continued credit decay, so with losses in the credit-card segment flat, Foran said "any sign that credit deterioration in U.S. card could be taking a breather is positive."
However, Friedman Billings Ramsey analyst Scott Valentin said April is usually the strongest month for credit performance, so flat losses compared with March actually represent an erosion in credit quality.
He thinks write-offs could breach his estimate of 7.5 percent this year.
The housing funk and a slowdown in the economy have pinched borrowers' ability to repay a lot of kinds of loans in the last year. Valentin said what may be happening in Capital One's portfolio is higher-quality borrowers are now defaulting on their loans, too.
Shares of Capital One added 66 cents to $51.91 in afternoon trading Thursday.
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