Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CAPITAL ONE FINANCIAL CORP | d469245d8k.htm |
| EX-99.2 - EXHIBIT 99.2 - CAPITAL ONE FINANCIAL CORP | d469245dex992.htm |
| EX-99.1 - EXHIBIT 99.1 - CAPITAL ONE FINANCIAL CORP | d469245dex991.htm |
 Fourth Quarter 2012 Results
January 17, 2013
Exhibit 99.3 |
| Forward-Looking Statements
Please note that the following materials containing information regarding
Capital One's financial performance speak only as of the particular date or dates indicated
in these materials. Capital One does not undertake any obligation to
update or revise any of the information contained herein whether as a result of new information,
future events or otherwise.
Certain statements in this presentation and other oral and written
statements made by Capital One from time to time are forward-looking statements, including those
that discuss, among other things: strategies, goals, outlook or other
non-historical matters; projections, revenues, income, returns, expenses, capital measures,
accruals for claims in litigation and for other claims against Capital
One, earnings per share or other financial measures for Capital One; future financial and
operating results; Capital One's plans, objectives, expectations and
intentions; the projected impact and benefits of the acquisitions of ING Direct and HSBC's U.S.
credit card business (the "Transactions"); and the assumptions
that underlie these matters.
To the extent that any such information is forward-looking, it is
intended to fit within the safe harbor for forward-looking information provided by the Private
Securities Litigation Reform Act of 1995. Numerous factors could cause
Capital One's actual results to differ materially from those described in such forward-looking
statements, including, among other things: general economic and business
conditions in the U.S., the U.K., Canada and Capital One’s local markets, including
conditions affecting employment levels, interest rates, consumer income
and confidence, spending and savings that may affect consumer bankruptcies, defaults,
charge-offs and deposit activity; an increase or decrease in credit
losses (including increases due to a worsening of general economic conditions in the credit
environment); financial, legal, regulatory, tax or accounting changes or
actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the regulations promulgated thereunder and regulations
governing bank capital and liquidity standards, including Basel-related initiatives; the
possibility that Capital One may not fully realize the projected cost
savings and other projected benefits of the Transactions; difficulties and delays in integrating the
assets and businesses acquired in the Transactions; business disruption
following the Transactions; diversion of management time on issues related to the
Transactions, including integration of the assets and businesses
acquired; reputational risks and the reaction of customers and counterparties to the Transactions;
disruptions relating to the Transactions negatively impacting Capital
One’s ability to maintain relationships with customers, employees and suppliers; changes in
asset quality and credit risk as a result of the Transactions; the
accuracy of estimates and assumptions Capital One uses to determine the fair value of assets acquired
and liabilities assumed in the Transactions; developments, changes or
actions relating to any litigation matter involving Capital One; the inability to sustain revenue
and earnings growth; increases or decreases in interest rates; Capital
One’s ability to access the capital markets at attractive rates and terms to capitalize and fund its
operations and future growth; the success of Capital One’s marketing
efforts in attracting and retaining customers; increases or decreases in Capital One’s aggregate
loan balances or the number of customers and the growth rate and
composition thereof, including increases or decreases resulting from factors such as shifting
product mix, amount of actual marketing expenses Capital One incurs and
attrition of loan balances; the level of future repurchase or indemnification requests
Capital One may receive, the actual future performance of mortgage loans
relating to such requests, the success rates of claimants against it, any developments in
litigation and the actual recoveries Capital One may make on any
collateral relating to claims against it; the amount and rate of deposit growth; changes in the
reputation of or expectations regarding the financial services industry
or Capital One with respect to practices, products or financial condition; any significant
disruption in Capital One’s operations or technology platform;
Capital One’s ability to maintain a compliance infrastructure suitable for the nature of its business;
Capital One’s ability to control costs; the amount of, and rate of
growth in, its expenses as its business develops or changes or as it expands into new market areas;
Capital One’s ability to execute on its strategic and operational
plans; any significant disruption of, or loss of public confidence in, the United States Mail service
affecting Capital One’s response rates and consumer payments;
Capital One’s ability to recruit and retain experienced personnel to assist in the management and
operations of new products and services; changes in the labor and
employment markets; fraud or misconduct by Capital One’s customers, employees or business
partners; competition from providers of products and services that
compete with Capital One’s businesses; and other risk factors set forth from time to time in
reports that Capital One files with the Securities and Exchange
Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended
December 31, 2011.
You should carefully consider the factors discussed above in evaluating
these forward-looking statements. All information in these slides is based on the
consolidated results of Capital One Financial Corporation, unless
otherwise noted. A reconciliation of any non-GAAP financial measures included in this
presentation can be found in Capital One's most recent Current Report on
Form 8-K filed January 17, 2013, available on its website at www.capitalone.com
under "Investors." |
| 3
January 17, 2012
Highlights
•
Full year 2012 net income was $3.5B or $6.16 per share
–
Completed acquisitions of ING Direct & HSBC’s US Credit Card
business –
Significant impact from acquisition-related credit accounting
–
Enhanced
balance
sheet
strength,
Tier
1
Common
Ratio
of
11%
as
of
12/31/12
•
Q4 2012 net income was $843MM or $1.41 per share vs.
$1.18B or $2.01 per share in Q3 2012
–
Ending loan balance growth of $2.8B; Average loan balances flat
–
Net Interest Margin compression due largely to higher card revenue suppression
and higher cash & investment balances
–
Higher non-interest expense
•
Outlook
–
Expect fourth quarter pre-provision earnings rate to continue
•
Modest decline in earning assets and improvement in margin
•
2013 non-interest expense of ~$12.5B (inclusive of ~$1.5B of marketing)
–
Expect strong capital trajectory above Basel III target; begin planned
capital distribution to shareholders |
 4
January 17, 2013
Fourth quarter results
Net interest income
Non-interest income
Total net revenue
Q4’12
Q3’12
Q2’12
Marketing
Operating expense
Non-interest expense
Net charge-offs
Allowance build/(release)
Provision for credit losses
Other
Pretax income from continuing operations
Income tax provision
Operating earnings, net of tax
Discontinued operations, net of tax
Pre-provision earnings
Net income
Diluted earnings per common share
4,646
1,136
5,782
316
2,729
3,045
2,737
887
156
(29)
1,014
1,723
535
1,188
(10)
1,178
$2.01
4,001
1,054
5,055
334
2,808
3,142
1,913
738
938
1
1,677
236
43
193
(100)
93
$0.16
$ and shares in millions, except per share data
Highlights
Wtd avg common shares outstanding
584.1
582.8
Net income avail to common stockholders
1,173
92
4,528
1,096
5,624
393
2,862
3,255
2,369
2
(1)
1,151
1,218
370
848
(5)
843
$1.41
585.6
825
Total
Revenue
decline
driven
primarily by higher Card
revenue suppression
Non-Interest Expense
increase driven by year-
end expense patterns
including marketing
Charge-offs
increase largely
from a lack of SOP 03-3
impact on charge-offs
A
B
C
1,150 |
 5
January 17, 2013
Yield/
Rate
Average
Balance
Q3’12
Net Interest Margin decreased in the quarter
Average Balances & Margin Highlights
(Dollars in millions)
Interest-earning
assets:
Loans held for investment
$
202,856
9.66
%
Investment securities
57,928
2.31
Cash equivalents and other
6,019
1.20
Total interest-earning assets
$
266,803
7.88
%
Interest-bearing
liabilities:
Total interest-bearing deposits
$
193,700
0.77
%
Securitized debt obligations
13,331
1.92
Senior and subordinated notes
3.08
Other borrowings
2.91
Interest-bearing liabilities
$
1.06
%
Impact of non-interest bearing funding
0.15
%
Net interest margin
6.97
%
11,035
12,085
230,151
Yield/
Rate
Average
Balance
Q4’12
$
202,944
9.31
%
64,174
2.25
10,768
1.04
$
277,886
7.36
%
$
192,122
0.72
%
12,119
1.91
2.95
1.87
$
0.99
%
0.15
%
6.52
%
11,528
20,542
236,311
Margin Outlook
Stable to modestly higher NIM
•
Expect stable earning asset yield
•
Expect lower cost of funds
•
TruPS called
•
Deposit management
Q4 Margin Decrease
•
Lower asset yields driven by higher
Card revenue suppression
•
Higher level of cash & securities |
 6
January 17, 2012
Our capacity to generate capital is strong
Tier
1
Common
Ratio
(Basel
I)
1
11.0%
10.7%
9.9%
11.9%
9.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Disallowed DTA
RWA
EOP Loans
Tier 1 common capital
excluding disallowed DTA
($B)
Tier 1 common capital
(0.5)
156
15.6
15.1
136
(0.9)
183
22.6
21.7
174
216
22.3
21.5
203
(0.8)
218
23.5
23.3
203
(0.2)
223
24.5
24.5
206
0.0
Basel III
equivalent
Tier 1 Ratio
of
~8%
2
1
Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1
common capital divided by risk-weighted assets. See "Exhibit 99.2—Table 13: Reconciliation of Non-
GAAP Measures and Calculation of Regulatory Capital Measures" for the
calculation of this ratio. 2
Estimated based on our current interpretation, expectations and understanding of
the Basel III capital rules and other capital regulations proposed by U.S. regulators and the application
of such rules to our businesses as currently conducted.
regulations, model calibration and other implementation guidance, changes in our
businesses and certain actions of management, including those affecting the composition of our
balance sheet.
We believe this ratio provides useful information to investors and others by
measuring our progress against expected future regulatory capital standards.
Basel III calculations are necessarily subject to change based on, among other
things, the scope and terms of the final rules and |
 7
January 17, 2012
Consumer Banking
Commercial Banking
Domestic Card
Our businesses continue to deliver solid results
•
Ending loans increased 3.1% in
the quarter, in line with
seasonal patterns; Excluding
expected HSBC and IL run-off,
card grew 4.1%
•
Ending loans were flat year
over year excluding HSBC
and run-off of Installment
Loans
•
Purchase
volumes
grew
9.4%
1
year-over-year, excluding
HSBC portfolio
•
Net revenue margin of 16.8%,
in line with expected seasonal
patterns and franchise
enhancements
•
Charge-off rate of 4.4%
–
Absence of merger-related
impacts
–
Expected seasonal patterns
•
Ending loan balances declined
–
$2.1B in expected run-off of
Home Loans
–
$700MM growth in Auto
loans
•
Seasonal decline in Auto
originations
•
Revenue decreased by 6%
quarter-over-quarter
–
Absence of Q3 favorable
valuation adjustment to
retained mortgage interests
•
Charge-off rate of 0.9%, up
5bps quarter-over-quarter,
driven by Auto seasonality
1
Reported purchase volume growth of 36% year-over-year
•
Strong growth continued with
ending loans up 4% in the
quarter and 13% year-over-
year
•
Net revenue up 3% in the
quarter and 11% for the full
year of 2012
•
Non-interest expense up 16%
in the quarter, driven by non-
recurring items. Full year
expenses were up 15%
•
Charge-off rate of 0.1% as
credit discipline continues to
drive low losses |
 8
January 17, 2012
Focus on Execution
Capital Generation &
Allocation
Great Businesses with
Attractive Returns
We are well positioned and focused on delivering sustained shareholder
value, even in an environment of modest growth and low rates
•
Relevant scale
where it matters
most
•
Leading market
positions and
market share
•
Resilient risk-
adjusted returns
•
Two large integrations
on track
•
Solid progress toward
delivering a great
customer experience
•
Tightly managing
operating expense
•
At or near assumed
Basel III destination
•
Expect significant capital
generation to continue
beyond targets
•
Capital allocation principles
–
Fund growth with attractive
and resilient returns and pay
consistent, meaningful
dividend
–
Repurchase shares |