Capital One Financial (COF) this morning announced that annualized U.S. credit card net charge-off rate hit 9.41% for May. Which is a record (Way To Go)! Of course the company is trying to let people know its just an aberration, what are they trying to hire a "Green Shoots/Geithner/Bernanke PR Firm"? Also is Ken Lewis at BOFA and Jamie Dimon at JP urging their analysts to upgrade COF, so that their net charge off figures will look better compared to COF?
I found this very interesting footnote (Needed my dads magnifying glass) form their press release.
"A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification."
Like I said....25% of all Credit Card Holders will default on at least 1 credit card by year end. The problems at Cap One is peanuts compared to the size of the potential problems at Both JP and BOFA.
If what you say about BOFA and JP are correct, then all of the Upgrades are too bogus and there should be an investigation.
ReplyDeleteYou obviously have not been exposed to Wall Street Analysts. I feel sorry for you.
ReplyDeleteBut thanks for reading.