Capital One Card Purchase Volumes Surge 5%, Consumers in ‘Good Shape'

Core Insights - Capital One's recent quarterly earnings report indicates a continued consumer preference for credit cards, with card purchase volumes increasing by 5% to $166 billion [1] - The company's CFO noted an improved credit outlook, leading to a modest release of reserves, with the net charge-off rate decreasing to 5.6$149.4 billion [1] Credit Trends - The charge-off rate and delinquency rate have been declining steadily over several quarters, with the 30-plus delinquency rate at 4.5%, up 0.22% [1][2] - The auto loan segment saw a significant year-over-year growth of 23%, with originations reaching $9.2 billion, although the auto charge-off rate increased to 2.1% [3] Consumer Health - The CEO emphasized the strength of the U.S. consumer, citing a strong labor market, rising incomes, and an upward revision of the savings rate, despite some pressure from inflation and high interest rates [3] - Overall, consumers are in good shape compared to historical benchmarks, with delinquencies and charge-offs in the card business aligning with normal seasonal patterns [3] Market Reaction - Following the earnings report, Capital One's shares rose by 3.4% in after-hours trading [3]