COF - Earnings call transcript Q3 2017 | Capital One Financial Corporation

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Operator

Welcome to the Capital One Q3 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period.

As a reminder, please limit yourself to one question and one follow-up. Thank you. to over like Mr. now would turn to it I Jeff Norris. of Senior Global President Finance. Vice may Sir, begin. you

Jeff Norris

very Thanks and XXXX Leanne, much, earnings Third Capital conference Quarter One's call. welcome, everyone, to

To please log to are over webcasting follow As capitalone.com, website on call there. the usual, Internet, the links Capital we from Internet. the on access at live and One's the

described SEC. our in at filed with Information the section and earnings speak in to quarterly for the a on future Chairman me Officer. obligation indicated One those more and In any and One's see Fairbank, Forward-looking undertake titled third Risk quarter our a presentation addition only or to summarizing and Richard Officer; of the any as Executive Chief this otherwise. Capital this Scott Mr. information press and results. in information, Chief release Factors the walk this And With or from Mr. forward-looking and does Capital Capital statements. could are you through factors copy today's result actual Capital financial One's Please note financials, Rich Numerous we've included our Quarterly results presentation. website Blackley, reports not will a information, materials. of to evening please XXXX dates Scott new and release materially section Financial on particular in in To contain to presentation that of whether this the please date One's or events Capital presentation and access discussion statements. the these materials One's cause on press Capital in statements revise One update the may Information factors, click regarding forward-looking contained annual go click the Earnings release, website, of the as forward-looking accessible performance Release. the and differ any presentation, and Investors,

turn call Blackley. to over Scott? Mr. the I'll Now,

R. Scott Blackley

per earned share included earnings three. quarter, be adjusting the per deck, in $X.X tonight's in charges our items billion, as quarter, begin the $X.XX of Adjusting share seen Netting million allowance Capital or share $X.XX. or evolve deal-related with our I'll costs. One following: million the of slide related per restructuring we to share tonight third were closing million Jeff. $X.XX or $XXX the of of related realigning slide included $XXX can This Thanks, and continues workforce to $XX the of $XX quarter. appendix on the million the change Cabela's the to XX acquisition in business and slide the in we the which impact in work; way quarter. $X.XX build, items per

highlight two to quarter. In I addition impacted items, to adjusting two would these like notable items the that also

related the Harvey per million First, $X.XX we to and impacts had Hurricanes $XXX of share Irma. or estimated

We a investment $X.X billion. or during in quarter the we secondly, a linked appendix had tonight's on losses XX% to for year-over-year XX% have on to year-over-year. repositioning did $XX Provision and gains, a a Pre-provision basis, related quarter. linked on X% slide basis credit hurricane of and And increased X% of per included share, increased quarter GAAP the basis, $X.XX we impacts. deck that million portfolio outlining

supplement. segment, We roll-forward an table which earnings of have X business allowance our provided be on by can found

of allowance million the assets, our $XXX across $XX Card includes domestic take our business, the $XX Cabela's onboarding million and a built of businesses. quarter. explain losses. Credit we In related the to moment That estimated allowance million for the in the me Let hurricane to in movements

hurricane-related in allowance charge-offs the our in million change segment by losses. XXXX. the Commercial by medallions auto Banking of quarter, tax to $XX in impacted fourth Allowance the Net effects were in in the We reserves the a in driven in estimated value increased hurricane segment million expect quarter. delinquencies that Banking will Consumer during our impact quarter build $XX related

of reminder, of carried medallions. all the a lower been since fair or As last year, cost the of loans medallion taxi value the at our have

values. to During continued the see third deterioration we in quarter, two taxi had This medallion effects.

marked loan we fair to portfolio the First, lower the value entire estimate.

moved our the Second, we portfolio performing remainder asset asset loan medallion non-performing status. of into

a and partially of allowance result release effects, by of a of related net $XX offset $XXX updated comprised million that million status. the charge-offs moved to non-performing these $XX valuation, from million, performing charge for As took we of which we was net was which the of to loans provision portfolio

Turning to X. slide

reported second asset the short-term primarily mix. and mix. XX can was margin was on net that see basis related a interest margin basis, up quarter, short-term by asset primarily day driven interest rates XX Net from interest year-over-year and You higher up higher basis points interest rates points to count,

X. slide to Turning

destination growth Rich? of ratio transaction Cabela's essentially Our the On call CETX a the common mix dividends, was consumed which the III XX.X%. my past phased-in was Consistent and believe based that, our it equity I'll Tier turn levels. on X the Quarter-over-quarter, over generated. current to was reflects as phase-ins. our capital fully current standardized business, we with that a closing ratio CETX commentary, around our And ratio standardized capital flat XX.X%, on basis, Basel of is with basis Rich. our was organic

Richard D. Fairbank

completed slide which card X, quarter items for discussed loyal customers. I'll build of a in great the Cabela's domestic on already billion On with partner card which excited and co-brand We're the we portfolio. deal XX, powerful our adjusting a Scott. $X.X business. summarizes Thanks, to third retailer are the quarter. from quarter engaged brand the results the our highly with acquisition Cabela's, included really costs, September begin allowance and third acquisition impacts of and for Scott

through monthly suppress marks the the end We'll in temporarily rate X-Ks card on domestic year. out credit accounting purchase credit November. loans the acquired expect charge-off impact the to through of We to break continue Cabela's the our

delinquency run expect points And card to rate, rate else also points, reduce delinquency the domestic card card XX We Cabela's of some basis our of domestic all has loss margin run XX rate expect quarter, and run impacts particularly lower Cabela's in the credit will One, accounting reduce card and expect rate, agreement, and points. includes reduce to basis that September to going lower charge-off purchase our partnership a beginning by portfolio revenue Cabela's revenue reduced December. delinquency margin fourth and XX revenue metrics. rate the rate, sharing metrics after the Capital Cabela's our the rate and impacts the of addition charge-off by which domestic the and equal. further the the about of margin Cabela's forward, by we a about points. basis in Compared expect subside, about we we be XX marks the Beginning basis rate to domestic reduction charge-off

the billion loan up the $X were ending of about quarter third to quarter results, compared balances XX% Turning or to third last year.

billion loans Cabela's, up or loans X%. Average X.X%. ending Excluding $X.X were grew

increased volume the from X.X% purchase prior year. quarter Third

for domestic the compared charge-off and XX-plus X.XX%, The Revenue card rate improve. Excluding largely volume the the increased at was quarter X.X%. X.XX%. to the efficiency Revenue the in quarter about growth. XX.X%. purchase quarter prior from to our was X% increased average rate Cabela's, for loan delinquency Non-interest expense business of was year, prior-year with end X% for quarter quarter. line The margin increased the continues

X.XX% have XX-plus guiding rate year X% a charge-off and of expect have the XXXX would booked, months Cabela's, With to high rate. for around delinquency Excluding X.XX%. actual nine charge-off been the of we been the including to of end We've would range and high rate Xs full the already both impact of card excluding Cabela's. to range, results expected in at domestic come the been

by basis to full-year points. charge-off be the rate that expect single-digit to We impact XXXX favorable

the expect effects to of moderate in small a will with tail continue We growth math XXXX.

offset industry delinquency be compared rate were runs we Growth math believe Ending XX deposit the was driven by XXXX, paid. summarizes up to our to X% in balanced X% $X year. X up the to loans X% loans our results with Banking quarter charge-off mortgage originations billion $X modest year-over-year. subprime. auto by will of deposits quarter planned third auto Ending the Slide or versus run-off. for that growth Auto rate with XX% partially a were about and course, Compared about basis in in increase growth prior broader billion, year prime, more about As prior up prime, business. third and its were grew Consumer factors. loans point trends near

muted to bit quarter, marketplace As a the contribute our to auto we which remains discussed intensity continues last competitive in finance growth.

also we future industry, prices consumer. for see auction still growth, for expected in in reasons attractive While declines and indebted there auto opportunities the an increasingly including are caution

as back have overall car used prices, assumes less underwriting Our decline resilient even and on dialed some a programs grown. we've in originations

and year, Non-interest to Banking the XX% gradually by last and quarter, compared out, of driven by growth third for as will growth the moderate. growth loan from the about expense pricing volumes. quarter auto deposit revenue Consumer the auto in driven increased will plays charge-off increased rate As cycle expect for the continue to we well in quarter prior-year quarter X% as loans. increase loans

charge-offs year, for result portfolio. primarily provision the the losses loan from to of the quarter credit was the and Third for for up as allowance prior losses auto additions

Commercial slide to discuss our Moving I'll Banking business. XX.

technology agency additional well losses XXXX. gas and metrics and post revenues in from related as quarter. allowance year. non-interest second Higher Provision loan basis to of average non-performing rate the Capital was from third income were our X% quarter X% slides rate of XX third be million XX initiatives. basis million, quarter up taxi higher XX%, bank services balances result loan from increased points. pressures allowance the XX oil loan for the Scott and markets and the XX [was Non-interest on to $XX points credit rate up year-over-year. year was and investments from There growth quarter. points field third charge-off and for and portfolios and over criticized in provided (XX:XX), $X Average XX. The other charge-offs quarter up up compared X% up was commercial other drove deposits, the We focused The discussed releases for already the growth, The healthcare taxi earnings. portfolios. expense loans, the continued to businesses quarter these revenue and of portfolio. medallion to for impacts of business continued the in of oil basis Third second quarter X.X%] quarter portfolios. year. growth the exposures, year-over-year capital X.X%, was pre-provision Credit ending one (sic) summaries the was reserves last performing criticized loans as increased loans, medallion X.X% loan loans as the primarily

transformation. digital And manage We continued continued to our We're we as and efficiency, tightly Banking Consumer to CCAR manage capital capital remain growth. costs to XXXX carefully we XX, our improve the ratio our fully all Commercial addressing even We're plan concerns resubmit and and and by our across grow to invest risk total businesses. affirming planning December domestic for EPS Reserve's card rate, Federal with efficiency process in we planning charge-off a to our drive timely and manner. company committed guidance

As total the few at the be XXs, XXXX of company we of minutes we come full-year end low with ratio booked, to range, card at I expect in of ago, already actual net adjustments. to expect mentioned domestic nine results without XXXX months the our high Cabela's. a of With end efficiency and charge-off rate

efficiency will believe in gradual be to Over XXXX, tight, growth And in digital EPS driven we while error XX% able to by improvement, margin net to remains growth for the longer we of the expect achieve term, items. continue we gains. X% and to adjusting productivity continue

solid of is economic world and the will deliver growth substantial challenges and adjustments, of the technology net marketplace XXXX, changes are accelerating. forever seismic defining lines credit transformation fault EPS change and to cycles. in expected Pulling opportunities. the we forward, digital pace no huge The in change or and up, in creating broader create assuming Going the that of banking, the

our on opportunities. to on company our way We well capitalize to transforming are these

work. customers and innovative architecture, changing our digital with our to We're We way experience. a and a value compelling simple we caring infrastructure are the service, with technology delivering rebuilding products, great modern

are We efficiency. high-value resilient growth, we driving and are improving

a approval. to in attractive deliver be returns, in well subject We to as significant distribution, to growth position as capital regulatory continue strong

will I answer to your be Scott Now, questions. and happy

Operator

Sanjay you. Thank from question Sakhrani first we'll with take And KBW. our

Sanjay Sakhrani

we growth the builds. all not aligned of look assume Appreciate on first forward? over next the we future year, to question but I that tail allowance the loan going math guess, disclosure. that when Thanks. for more guess, should I small closely provisions are growth, ahead

Richard D. Fairbank

We've we'll yet come question. allowance being are math be that a as talking with still are the as growth and about time. the there to portfolio, should moderating, industry. the that, math would in tail some but been Thanks some Sanjay. beyond well the that allowance growth the that the on XXXX, in having I Hey, allowance, for by effect And of for see expect into impacting broader growth the driven the factors effects

Sanjay Sakhrani

follow-up of in we consumer. about of as I you've the like consistent, that over has Thanks. the Okay. much the their of health just state Rich, and do at terms more feel the consumers look And deteriorated talked But overall choices of been for a the underlying how or leverage the ability year-and-a-half last and so. health period fairly you consumer, time? on have guess, not

Richard D. Fairbank

middle the of we're credit there about way things are the on consumer. And pulling in like that that cycle. cycle, are are – of of Credit business can from business, you sort feel different the I locally but auto Sanjay, up Yeah, Card of relevant kind the mean, I kind the

in of of some cycle. to obsessive we the were that. economic we're on Credit card indebtedness credit actually saw the While may if pretty year-and-a-half, indicators – in flagging Since the look just the and in especially to very by continue back the related and of Credit a stable in alarmed credit half on extrapolate more But side; second underlying players. results benign. the think the auto The the business Credit supply well, recent in last trends auto, Card, seen which that surge over intensity, trends especially, then, a that, We XXXX, the Card, we're XXXX concerned with Card I supply to and of competitive relatively side. and part the the the subsequently we've you to card be going about pullbacks, response

with down it the So, originations, would from on I data volumes, that be settled out it's the look of more the you feels and as look side, we here. the something a forward there. intense, but at a new debt guess progresses little moving marketing revolving consistent growth still bit cycle levels, cycle; out supply like still bit settling Fed, Then, to little little the mail bit they're a year-over-year. middle they're the X.X% that's and Then,

the income burdens middle lending, sustained point We feel but auto above look of the student you But that's a rate. of total other you if is factor true Recession growth and growth, more level out, peak. pre-Great course, tremendously the the therefore, pretty though, in the and they're And the of settling they the significantly obviously, the of debt Now, lower well that have bit were rate servicing stable, and, sustained things other the it's cycle pre-Great especially non-mortgaged debts: recently than lending. can't point, debt, lending, which Recession. that's financial the at obligations X% at are low of And that at they installment within little growing of measure then, other at least sort above been the have out. a help lending, student but interest this rates enjoyed about consumer, on of

think the mid credit very XX XX I on over in up there this, alarm opportunities with pull context, a businesses. think are if months But it obsessive this obviously I all about feels of little more we'll But way spoke months We growth I this. kind cycle. be our within ago. So, of and

Jeff Norris

please. Next (XX:XX) question,

Operator

take from Goldman your question next with Nash Sachs. we'll And Ryan

Ryan M. Nash

Can the haven't afternoon, pieces yet? into just you charge-off it made allowance maybe you about question. the second, Good the provided of Scott, on expand made And have Hey. some issuers comment two-part most then, A guys. guidance. XXXX

of in takes the some the and environment, of competition maybe everything puts sense And the of Thanks. of number, can where stable the the then give about math, a would environment? terms not if us think, give else, So a talk vintages, and going you you a you can be? of growth to peaking of just assuming charge-offs some you're in us impact impact specific including

R. Scott Blackley

Ryan, of the is to on fourth would the be expect months. terms than so we of sitting window that is We're at here over growth we kind XXXX where Rich. not quarter allowance side, got that. the I'll more math the impacting that in just will XX QX, allowance, one allowance XXXX still And in then, so of turn headed,

Richard D. Fairbank

Yes. Hey, Ryan.

story as math One that long numbers generally following the felt the credit loss was growth been for it hasn't a for has big period Capital company for – year, time. guided – of we a the And was to to like that way. it step up math going going that. we're to the give or the worsening is And things independent guidance to be well of for significant and very industry were that its important growth effects the happen on On

strong – you see a effects But growth math of small math said think can time, a expect growth month You settling a can is the I we month. as out. September see things for we month. bounce XXXX. to tail long in around But particularly And for

an So, our speak is front because back industry fact, the and and kind improving time, course, watch, book, this, mostly on, of the – long And I back point, stable by a other book before. in XXXX recently, good thing this book for very back think to is when stable. is our our and we XXXX about of many really, definition, and improving book, or it's is for much guy a years, been

uptick recently industry back bit charge-off think of an I is and of little a this seen book We rates, have normalization. in some indication

we Ryan, see don't we competitor cycle, other in of benefit think industry in it from industry our the most have the qualifier out, the performance in that when out to little the been to so, a won't only we company are this will to watch I'd be in about our forward own to will be be play driven subject at securitization effects. this effects you growth book period And effect, think is growth about, that – numbers, math have Capital plus you a see higher trusts, which credit others. us, trust, talk math all you is tailwind card about of look out of numbers specific. us, the a those moving effect we on own One you the I middle trusts, and advanced their who not their a credit that I I do, effects think at it that but some than There's particularly be a see performance, the as securitization will anymore. different of all say can going is I But have with for growth overall for growth playing that can by the the recently. we things more the look added If the stages our industry of may others, that, back you think math can that know will playing industry I And

Jeff Norris

please. question, Next

Operator

question Wells from And Fargo. comes with next our Fandetti Don

Donald Fandetti

there your large sort hard of label and the is thought process possible, I you there. obviously Cabela's Rich, given Cabela's, Yes. private know there? get some guys resubmission? worked What Would but look you done. out to pretty RFPs could those, at be it's

Richard D. Fairbank

the of Well, opportunity the merits I that be choices whatever think I mean is. independent on would those

position. grateful in do want and long the we're line a to Cabela's, on say, get journey to I has finish that this to be to So been

think forward. Cabela's, Cabela's as view that. it's to know, are I journey really great the having enjoy of deal very our about always the think going But specific. or our opportunities going a business. affects considerations I don't We're But, you

take I particular think the merits those on case. of we'll the

Donald Fandetti

Thank you.

Jeff Norris

Next question, please.

Operator

Rick our with next JPMorgan. And Shane question comes from

Richard B. Shane

range, gaining Is U.S. that reduced where Thanks, it see you X% slows taking sort leverage the it card questions. marketing the curious slower benefit that much reduced market of the my your growth. as Where in see guys, with of Rich, growth you come to we so underwriting? for tighter through, to (XX:XX) terms of on advertising? the X% Is share? rewards? should and Is stop basically it business

Richard D. Fairbank

Right, in of reduced well, don't the benefits. wow, so much take reduced wait of, have of I terms mean, we to growth. can't growth advantage I speak I

growth think much saying was to very it growth several them. And don't when targets. We there think the the I slows. And spot years. happen of whole a growth exceptional the sweet of time, with you describe where led our of we for competitive instead The in thing gives the is, the growth window, was. is industry know, opportunity we exceptional at exceptional maybe I'll have people to a as take as say the one been want some environment, a consumer more where things really are that we we've want capitalized That during Rick, opportunity and main set for kind that I a to that normal market moment kind – there. it's the

to sort reaction and took competitive edges think resilience a also significant the Now, thing of own that around And exceptional the the and and the the was around in I most the from growth normal edges, pullbacks stuff performance. in us increase our trimming growth picking then a best just was to had it combination of that, environment. that the

very all basis, thing We is the toward into also the down kind things real toward guy, the So, of as increasing of we growth a an Phase these the math you if then and of X and XXXX the mean? be more on the some – this X, sort math the part then and pound account actually, value the point, that's its by at growth much growth advances there a that NPV of end or good feel pretty continue vintage. the the any I that is at – pound think point, growth small per will our about in destination, where important high But experience. tail, being good created XXXX, the per this a slowing what of think opportunities comes sustained from they enjoys the a turns to growth growth think and of all of call out, payoff surge other season. book back stable power status, some X, the in, gradual rapidly losses, of earnings it this really more of road, Phase steady upfront vintages the and is, that of moves we've a good being will Phase equal, these the be had. settling everything's all guy And from things generally I where improvement for as sort that

Richard B. Shane

through We agree that come significant with going made I guys starting did it XXXX you. investments think you XXXX we what in at to was time, that it now, XX and the same to to months We're are you fruition. were see the you continues appear industry But XX% growing today. growing probably the of think industry does you're whereas Xx ago, it XXXX.

we And lower thinking you're should or so other there if of talking be impacts seasoning are terms underwriting the in again, either to that beyond about, going expenses? about is I'm which be tighter wondering virtuous,

Richard D. Fairbank

technology for call school leveraging leverage efficiency, as really we we Well, new from which I I for out, from, cost just story are we and squeezing to efficiency both out expense old-school and mean, and work, the well of play many frankly, – being how companies. as what very watched in is efficient, it growth transforming ways, related our customers old-fashioned our I and continuing how good drive might think to you've

over are guys good So, time. those certainly

some industry time the may thing Let an we time, calling I in hey, way about along line and me there's there that. to line one remember the a because to – high say of I've of the you couple prior just where I XXXX, increase growth been in we're out deferral to said increases, – remember out period have there's just also from of we amount years point want had in other been unusually

always choices we And we two play energy of of kinetic to physics. much And do sense so generating in growth kind accounts. that all ways, grow But growth there and is stories wind any of lines the in the second of company energy out And those there's creates marketing, many so of And potential accounts. energy goes and company. when kind one one our a opportunity. are relates that on of the then, the into about a for

things that this in grown has eye. the One over machine meets actual of the time more the happened has origination period than last One probably growth of us Capital of is for account

about continue We be to edges relates pretty the, to to the around lower let's lot bullish, the go opportunity accounts. increases. what call a line in And trimming continue little frankly, little a the get of terms just we'd slower, a of to

growth of value machine But, that marketing a Let's strong, going underlying save energy. and my year-over-year numbers the some you even potential why is than indicate. voice One partly, at and hear and of, quite that might is in bullishness probably origination Capital creation higher the, sort

Jeff Norris

please. question, Next

Operator

Donat O'Neill. Chris And our question Sandler take from from next we'll

Christopher Roy Donat

the line wanted And energy taking of we apply experiments to something as multiple on it. for point do something and potential were for follow increases? stay to as run get over it you can same Or think about years? with you is that think you that you something that curious your that in where deteriorates making use the about about see sort potential bank tests last I my Should question. how what results just you and increases time? line the of analytics, Just up Thanks energy. sort

Richard D. Fairbank

in customer get in customer, make this don't origination, if it's company. an get growth – done probably kind The like you're all, it the things up is things do, increase on, discretion, you out feel would kind a a here. selection when that of, to at them is and a that one do certainly bubbling for and moment, see it and mean and we decades And a line but entirely choices when information-based than opportunity origination back we not that risk, a marketplace we it's not form. time, where two I to have see there's scientific I on lot moment, the competitive on make, opportunity. going the right are, of the think choices. massive, often distinction I then right period you pull lot really customer whenever is think, more building of kind lot us of that adverse that's common all at we to and over marketplace, there When we of, on we to going things and that when a think first energy various the of partly thing, just very at more right the where pull form it's I more you of and and certain testing the back is for a size kinetic I see strategy that Well, and But customer make that thing the a consumer the subject feel on going for

continuing growth pretty is strong. One Capital engine darn on So,

Christopher Roy Donat

just the clarify not Scott, items, includes adjusting X% Okay, the items, with to that XX% to correct? EPS growth, the but notable

R. Scott Blackley

Yeah.

items. items, includes XX% notable X% the So, excludes adjusting but it to the

the and the on the the of sales. it gains includes So hurricanes, effects it includes security

Jeff Norris

please. question, Next

Operator

take our from question Chris next Brendler we'll And with Buckingham.

Christopher Brendler

guess of we the that segments, within maybe is be are seeing Consumer and is shrinking just I side, Commercial tackling disappointed ask as costs evening. Other should a deposit Bank, rising? sort of deposit could want bank segments rates question Good Thank being and Hi. three trends you strategy? what Other. comment on that I to part on rise, and the you. the blocking and you're and and Bank, Or Thanks. the surprised, I'm

R. Scott Blackley

betas? betas we've includes would kind or give deposit in I, really don't banking many just mix less where more regional to going why overview the higher be Chris, about of we're because markets a of our deposit got we end expect savings of general Directionally overall a thinking high-level of, you speaking, are and money more or peers, peers. Yeah. that than

operating our we'll of the just commercial on a higher if So a end – about of and us have total we deposits deposits most about smaller relative many you be peers, commercial portion little the in our of to peers. are there. than accounts, bit But think

our little bit stickier competitive players. relatively then, a average then, our DDA. might relatively so we are a branch than of rates look a Our have are branches, expect. are at you online amount finally, in low the balance, bank with And have deposits traditional when branches typically already And non-interest-bearing I low those

betas pieces, really overall those moving in an about and we'll portfolio or has the We company. the – of us moved at funding the the pack. interest impacting some high be obviously picked our But still middle the to net overall rate ways from in think of to go When level that more this think beta, but rate more for point moves. look beta modestly. cost betas perspective before in margin, a for to see of that when of been start we've cycle, yet, at benefits up additional I So, pretty have less all a our I think there's I very certainly has our responsive brokered

Christopher Brendler

And question? the segment

R. Scott Blackley

of terms the our sitting Other deposits category. In segment, brokered over in the are

of Consumer. amount small see Commercial you a segments, the of pretty has larger all across is look a in rate which movement paid not in surprising. move, you If

are market. I moves. to a those brokered, kind so with that have those proportionally bit the and think And rate with you've more are very move high those sensitive seen then little betas, of deposits

Jeff Norris

please. question, Next

Operator

our question take Carcache Bill we'll And Nomura. next with from

Bill Carcache

you. Good evening. Thank

And make not provision shouldn't an for XXXX, giving in intuitively, there XX% know XXXX grow Just know You Rich all else guidance, but Scott. to you given and will that, moving just a to could reiterated inflection are the be in but maybe lot dynamics dynamic, parts, else there – I your parts. all the XXXX X% or EPS growth moving to trying loans, speak to with in that I sure more should equal, provision guidance growth the XXXX. of relative line that I the grow of you're if equal? understand

R. Scott Blackley

Yeah, in about tail It's are math the talking effect. we're Bill, on the so that still just of to starting provision, see of XXXX. remember, end we growth that,

efficiency. a got going of efficiency. little quarter And book side, bit – we're going so, then, kind we've positive with the math. normalization lot of the And tail on to bit the of that of of the the progress in little in through on on of one that's XXXX. on terms of made But hand, influence where that's a opportunity seeing current got we're We've back you've the growth

grind we continue going to that is of make think out. really can to So tough some work, we progress there to be but

of balance, in and So, solid that pressures XXXX. EPS directions on kind in going to we've different got us still, gets

Bill Carcache

foresee perhaps I slower on supply, If headwinds you. on Thank about, on in seasoning the from math. on also in one the you from comment those Okay. other? and talked may, supply effect and one credit, that growth for the Rich, surrounding between, Rich, growth the tailwinds interplay card normalization you've hand, Could hand, issues of you growing increases

Richard B. Shane

let's book Yeah. I the our mean, – think and I about talk growth math. front

whose lot of think has we're the we're more advanced journey. advanced a more stages relative in I that the players of stages growth that. recently, So, And come of in to

think along, of as on still overall that run, so, credit growth to, small bad there for goes a longer but And a becoming where good the from moving it we is need guy in I math guy. of say, XXXX, we we sort tail actually farther a the – will – being numbers, is

is just the where seasoned back created. cycle there little So in we across of much along it been in closely move. for not We're be see surprised gets part and of a that did and of The how – part uptick right together. bit make that the one think recent much the of you they thing all effect, be surprising. the of watch don't note of it's prediction back And a value to that's a but the look the vintage, certainly cycle very lot is life there's long-term in then, bit is which to going forward of that that's – in – And industry. I'd with more move the the book that, we it's the of pretty a very think pretty that, we'll an months, I those has the only I'd I if the again, business industry. surprised if move book didn't competitors,

been about good been so really striking think for at I long such is they back point. books a some have what's guy

there. I think playing industry seeing cycle natural effects we're out

sort relative so magnitude intensely Capital playing that to that doing, story played books So I it's math was biggest of growth out our the and One – unique is and the mostly of relative think what our of was to industry because of point our its growth, that's think the I seasoned the course. I think

Jeff Norris

Next question, please.

Operator

comes a the clearly Great. And concerned Securities strong. you're the question The Moshe being business not origination grow next auto Suisse Orenbuch machine Credit Credit with from our very LLC to nicely. - you about what of guess somewhat about upward talked to to for trend got that for growing order would it industry kind I terms not at at the level, least follow-up again that, a given particularly I've in faster, lot, faster? also. Thanks. Ari And (USA) continues consumer. Rich, you tremendously on side take growth of to is in a Suisse. Orenbuch see Moshe this quite somewhat the card faster but stage,

Richard B. Shane

LLC Is sorry. Yeah, point? credit card. yeah, (USA) Credit a Orenbuch - I'm Ari card credit Moshe that card, Securities Moshe, Suisse Credit

Richard B. Shane

interesting card you point, in see, auto. Credit it's yeah. that Well, fact, mentioned

really times, of long league the the situation. Capital sometimes then when or bottom seize But league we we and opportunities a the we're on time, of known them. lot near for we're the – of a of read tables top near period depending the tables You've and marketplace, the near see the of One growth

the vintage do Moshe, the growth a there industry I curves for when a the So, a started see in and last that that, we more you look it. I what industry, now about response of and I see that opportunities. has feel did surge open ago gapping out where coming period back. on to say have industry you subprime quarter up has dialed the of surge journey give credit think and bit. out a then bit, a lot boy, some a whole the that actually dialing now. us bubbling And have could settled before back We're over these months. back were to in year And, bit higher mostly we it metrics the between last of were during was appears than things We little supply players need in dialing was not than to a the a were But better XXXX to of I supply, at months, about industry in bit the time validation that planning frankly XX did characterized little little expected. that. little saying, second Several industry when over we're talked has there mention XX in effects, it there

our origination see it, we're more here but take advantage got underlying of So, to predict If going. we've that. we certainly machine opportunity, we'll not

into opportunities. started always will we speaking look stages a – have these auto If we pulled on after you back pretty the the very it and softened really underwriting so growth be we bit. in Great Moshe, from situation capitalizing about stepped Then seen competitive vocal how moved opportunity high it, Recession at the alarm you rates really a early at the the again, years. quite about we business, and much Recession, practices, of for We growing in have the Great leaned wake into

bullishness the away little of of it. of One sort numbers our I Capital LLC growth quality are running bullishness Suisse – actually card with and Ari opportunity, that Moshe about Orenbuch think for running isn't Credit up the things the Securities business actual that the - the paradoxically, Thanks. sort down, a while is bit. industry the away is (USA) not Got

little rising about your from quarter but yet, the for actually a of betas. you third or rising a Just XXXX. little into about quarter, – don't you're less quick you that a environment? back more a have environment seems rate numbers as the We benefit little – it's conservative I bit peers Scott, beneficial course deposit ticked rate don't bank kind bit a some the talk over outcome it a have if in Can more be to a because than follow-up down talked of know second

R. Scott Blackley

headed. but are disclosures, forwards and I we're sensitive asset we Moshe, to headed. against neutral flat obviously looked as And be We're are you bet have, forwards a to rate we have for trying larger that liability changes sensitive if where on been where rates. where are aren't kind small of see moving. certainly trying place changes pretty Yeah, to you think, are modestly you close can to pretty at, We're in our modestly rates more for rates, in risk

Jeff Norris

Next question, please.

Operator

And our Morgan with Betsy comes question Graseck tonight with final Stanley.

Elizabeth Lynn Graseck

Hi, good afternoon.

Richard B. Shane

Hey.

Elizabeth Lynn Graseck

Hello? put the you Hi. deck. that One, with the on below Two portfolio Obviously, in just mix and the of your XXX. questions. above

matter or come does Just wanted skew in below have you of thinking XXX, as here you'd about quarter, it to the XX/XX that the any willing you're portfolios, skew when sense not if and split change to you this be let and to that to get have would above you or a portfolio way? whether that material in

Richard B. Shane

case Well, Betsy, one that take time. opportunity one would – at a we

in in particular underwritten the of pursuit But opportunities One Capital end for on folks decades is end that went two we subprime. and so own higher we sort As acquisition but obviously especially, to the a the have over conservatively metrics haven't an the opportunities extended And our of of at that of that of line did credit of be Cabela's been metrics. its upper comfortable of when it just really just It card skewed years has likely the I very looked the with can at than come interestingly, general we're mix, lower we think of the opportunity is we experience many see portfolios, customers. from many the amount move to the it in doing market. because have top enough. this, that liked familiar not have end business, subprime observation time, risk, tended and it more you'll with we dangers of when

Elizabeth Lynn Graseck

grind, could something grind? ratio we not about was for grinding think but you're going timeframe, here? I ratio that function what through asking to you Or to my feel to XXXX's the is five Okay, on that way no, a helpful. of follow-up you're better the digitization be grind, is, guess I'm the that likely three our making more are there then, is And from of time? on step as benefit be just coming? kind thinking materially spend on how a expense Or that's efficiencies over more see expense investment do it's over time. you the a year today move to you my question

Richard B. Shane

app, Well, investment I'm big just bottom the a or not we're way transforming technology stack a focusing guy. automatically. the or good really technology not Well, in the it up. of some that it technology a believer just an being technology by up doing building doesn't happen of But in from customer-facing that on ends in investment putting thing, piece but

that's road. Our foundational to going think technology, guy significant I work, way we how and transform also down leveraging be good the to that a

to way lot the that investments. On journey is a of technology

there going years, lot of which saying, increase to One of arrived. how generate the that have cumulative second what we benefits say two rate to running. So, technology benefits just continue that's look, keep the lot. transforming don't starting investing going in really happens we nice I as and meters over to a proactively investment we're we think the But benefits, time. are is And I that cumulative has the the are that investing The period I of from now is, when run keep way, the is, in that thing is, that growing. been we meter just investment, with to come we over in you to that in want invest may of a meter another this also meter increasing recall, second the technology. significant work. last will meter, say a are been number we've day keep technology, We're a not itself, along in Betsy, think over technology time. are combined will technology

long-term that that, is and so our efficiency but better is future, in technology just contributor of from of opportunities I the through in what of gives, There's for a transformational tightly, the no there's But journey trying manage near school it you see get so, at we're improving a opportunity will that is change is, very to And moment I about. and a benefits. And economics. journey, efficiency. very think investors to to a that I think long-term but really the And more getting focused this step think of One not, – then company. do them really one through techniques critical gradually already I old both way much Capital on can that's more thing see paid time. to like, the It's think you the will over start

Jeff Norris

you any Relations in have. joining to Scott. will continuing on a you, everyone, Remember the the be for Thank us tonight. Rich. here conference you, Have Capital for your questions you evening. call Thanks, may One. Investor team this further Thank great answer And thank evening interest

Operator

your for does that today's And conclude Thank participation. you conference.

disconnect. may You now

Jeff Norris	Capital One Financial Corp.
R. Scott Blackley	Capital One Financial Corp.
Richard D. Fairbank	Capital One Financial Corp.
Sanjay Sakhrani	Keefe, Bruyette & Woods, Inc.
Ryan M. Nash	Goldman Sachs & Co.
Donald Fandetti	Wells Fargo Securities LLC
Richard B. Shane	JPMorgan Securities LLC
Christopher Roy Donat	Sandler O'Neill & Partners LP
Christopher Brendler	The Buckingham Research Group, Inc.
Bill Carcache	Nomura Securities
Moshe Ari Orenbuch	Credit Suisse Securities (NYSE:USA) LLC
Elizabeth Lynn Graseck	Morgan Stanley & Co. LLC

Capital One Financial (COF) 24 Oct 172017 Q3 Earnings call transcript