BAI Banking Strategies Daily

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Credit-Card Giants Strained

January 18, 2013

American Express and Capital One Financial both announced Thursday their provision for loan losses and expenses increased in the fourth quarter, putting a damper on earnings.

American Express and Capital One Financial both announced Thursday their provision for loan losses and expenses increased in the fourth quarter, putting a damper on earnings. Capital One did not meet analysts' earnings and revenue projections, which sent the lender's shares plummeting more than 7 percent after hours on Jan. 17. The credit-card industry has performed strongly in the past two years due largely to consumers' good behavior. However, this trend among borrowers also means many consumers are carrying smaller balances on their credit-cards than they once were, restricting the revenue lenders generate from charging interest on loans.

Author: Wall Street Journal (01/17/13) Johnson, Andrew R.; Rieker, Matthias

Source: "Credit-Card Giants Strained"

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