The American bank holding company Capital One has released financial results for the second quarter of 2023.

Currently, the reserve for possible losses in the credit card portfolio of this financial institution is just under $11 billion, which is equal to 7.7%. A year earlier, this figure was 6.7%.

According to the results of the second quarter, the company’s internal card business demonstrated a level of late payments, which is equal to 3.7%. For the same period in 2022, this figure was 2.4%. At the same time, the volume of purchases using these cards increased by 11%, amounting to more than $154 billion.

The firm’s chief financial officer Andrew Young and CEO Richard Fairbank said that the volume of purchases is fixed at a high level. According to them, loan balances in American businesses at the end of 2022 increased by 18% compared to the level of 2021. They also stated that the delinquency rate is currently higher than the level recorded in 2019. Management representatives reported that the write-off rate continues to recover, and in the third quarter of 2023 it will reach the level of four years ago when the banking sector existed in the so-called pre-pandemic reality.

The number of authorizations in the company decreased by 31% last quarter. The average deposit amount increased by 12% year-on-year and by 2% compared to the first quarter of 2023.

Approximately 69% of the company’s customer base has a FICO score of at least 660, which is a percentage point less than last year.

Credit card loans increased by $5.3 billion, or 4%, to $142.5 billion in the second quarter. Loans on internal cards increased by $5 billion, by the same 4%, reaching $136 billion.

The company’s net profit for the second quarter was $1.4 billion. The profit before the creation of reserves is $4.2 billion, which is 7% higher than a year ago.

Richard Fairbank says that with the digitalization of the banking sector, modern technological capabilities expand the set of business opportunities for the company. He also stated that the firm has made progress in improving underwriting, modeling, and marketing. According to him, the dynamics of improvements are proportional to the expansion of using the machine learning scale.

Andrew Young suggests that in the coming months in the US, unemployment will increase to a range of 4%+. He also stated that lending is in a state of gradual normalization. Richard Fairbank added that past write-downs are the raw material for future recoveries. According to him, the company’s recovery indicators will be low in the short and medium term. Separately, he noted that excess savings remain, but reserves are declining.

As we have reported earlier, Walmart Suit Seeks to End Capital One Card Relationship.