This is yet another reason why we are not yet seeing the end of the recession or the problems with the banks. Problems such as failing credit will only grow as more people lose their jobs and/or their houses.
Capital One said defaults on its U.S.-issued credit cards rose in January as unemployment soared, sending the company's shares down 17.5 percent.
Two analysts said Capital One might have to cut its dividend in 2009 — only one year after a 14-fold increase — as growing credit losses and the need to set aside money to cover those losses are expected to dent its profits.
In a regulatory filing on Tuesday, the company said the annual net charge-off rate— a measure of credit default — for U.S. credit cards rose to 7.82 percent in January from 7.71 percent in December, while the rate for loans at least 30 days delinquent increased to 5.02 percent from 4.78 percent.
The McLean, Virginia-based company said it expects loan losses from U.S. cards to increase to 8.1 percent in the first quarter.
In auto loans, Capital One's charge-off rate rose to 6.09 percent in January from 5.93 percent in December.
"The credit quality metric that Capital One posted this morning were representative of the deteriorating economic backdrop," said David Long, an analyst at investment bank William Blair.
