Cap One Cuts Earnings Forecast

Mortgage woes spread to credit card, car loan giant
By Jim O'Neill,  Newser User
Posted Jan 10, 2008 6:46 AM CST
A fraying Capital One flag flies over its headquarters in McLean, Viginia.   (Getty Images)
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(Newser) – The nation’s largest independent credit card issuer, facing worsening loan troubles and a struggling US economy, says it will cut its 2007 profit forecast 20%. Capital One Financial 's news is another indicator that the mortgage crisis is infecting other loans, the Wall Street Journal notes; the company is also a big issuer of auto loans, and has seen increasing delinquency in that business.

Car loans written off in the fourth quarter nearly doubled over the previous year, the bank reported. “It's another bank in the negative credit-market slipstream,'' said Howard Wheeldon, a BCG Partners strategist. “The outlook for bad loans remains grim.'' The bank says fourth quarter profit will likely be 60 cents a share, down from $1.14 a year ago.