Capital One 2004 Annual Report Download - page 41

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RISK FACTORS
This Annual Report on Form 10-K contains forward-looking statements. We also may make written or oral
forward-looking statements in our periodic reports to the Securities and Exchange Commission on Forms 10-Q
and 8-K, in our annual report to shareholders, in our proxy statements, in our offering circulars and prospectuses,
in press releases and other written materials and in statements made by our officers, directors or employees to
third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are
forward-looking statements. Forward-looking statements include information relating to our future earnings per
share, growth in managed loans outstanding, product mix, segment growth, managed revenue margin, funding
costs, operations costs, employment growth, marketing expense, delinquencies and charge-offs. Forward-looking
statements also include statements using words such as “expect,” “anticipate,” “hope,” “intend,” “plan,”
“believe,” “estimate” or similar expressions. We have based these forward-looking statements on our current
plans, estimates and projections, and you should not unduly rely on them.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and
assumptions, including the risks discussed below. Our future performance and actual results may differ
materially from those expressed in these forward-looking statements. Many of the factors that will determine
these results and values are beyond our ability to control or predict. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. You should carefully consider the factors discussed below in evaluating these forward-looking
statements.
This section highlights specific risks that could affect our business and us. Although we have tried to discuss key
factors, please be aware that other risks may prove to be important in the future. New risks may emerge at any
time and we cannot predict such risks or estimate the extent to which they may affect our financial performance.
In addition to the factors discussed elsewhere in this report, among the other factors that could cause actual
results to differ materially are the following:
We Face Intense Competition in All of Our Markets
We face intense competition from many other providers of credit cards and other consumer financial products
and services. In particular, in our credit card activities, we compete with international, national, regional and
local bank card issuers, with other general purpose credit or charge card issuers, and to a certain extent, issuers of
smart cards and debit cards. We also compete with providers of other types of financial services and consumer
loans such as home equity lines and other mortgage related products that offer consumers debt consolidation. We
face similar competitive markets in our auto financing, small business lending, home loan lending and
installment loan activities as well as in our international markets. Thus, the cost to acquire new accounts will
continue to vary among product lines and may rise. Other credit card companies may compete with us for
customers by offering lower interest rates and fees, higher credit limits and/or customer services or product
features that are more attractive than those we offer. Because customers generally choose credit card issuers (or
other sources of financing) based on price (primarily interest rates and fees), credit limit and other product
features, customer loyalty is limited. Increased competition has resulted in, and may continue to cause, a decrease
in credit card response rates and reduced productivity of marketing dollars invested in certain lines of business.
Competition may also have an impact on customer attrition as our customers accept offers from other credit card
lenders and/or providers of other consumer lending products, such as home equity financing.
Our diversified lending businesses, including auto lending, small business lending, home loan lending and
installment loans business also compete on a similar variety of factors, including price, product features and
customer service. These businesses may also experience a decline in marketing efficiency and/or customer
attrition. In addition, some of our competitors may be substantially larger than we are, which may give those
competitors advantages, including a more diversified product and customer base, operational efficiencies, broad-
based local distribution capabilities, lower-cost funding and more versatile technology platforms. These
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