Capital One 2005 Annual Report Download - page 5

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Our international GFS businesses are making strong contributions to the bottom line. We’ve become a significant player in
financial services in the UK and Canada. We have the #7 card business in the UK and the #8 card business in Canada. This
year, the UK market suffered through a consumer credit downturn. Credit card charge-offs and delinquencies increased in
the UK which impacted our business. Despite these challenges, our UK credit card business delivered solid profitability, and our
Canadian business continued to thrive. Combined, our international businesses delivered $135.1 million in net income in 2005.
We continue to be excited about our opportunities in our domestic GFS businesses. We’re growing our small business
franchise and, with the addition of Hibernia, we now have $8.6 billion in outstandings. Our small business credit cards
generate the highest MasterCard®and Visa®purchase volume in the industry. Because a big portion of small business banking
is local, small business is at the intersection of national lending and local banking. With our bank, we now have the
ability to tap into new markets to accelerate growth and to offer a full spectrum of small business loans to our customers.
The home equity market is growing rapidly and increasingly is becoming a direct business. This business is right down our
power alley. In 2005, we acquired a home loan growth platform called eSmartLoan, an originator of home equity lines, home
equity loans, and first mortgages that generates leads through multiple direct channels. Our home loans business has created
a tremendous customer experience using a proprietary, customer-oriented selling model. Home loans are becoming a major
growth play for us with $4.7 billion in originations in 2005, including Hibernia’s home loan originations.
We’re Creating A Leading Brand
Capital One has built one of the largest customer franchises in the United States with almost 50 million customer
accounts. Early on, we relied on the MasterCard®and Visa®brands to build our credit card business. However, we’ve
always believed that building a great brand is essential to creating a diversified financial services company.
We made the bold move into national television advertising in 1998. In a few short years, we’ve built one of the
most-recognized brands in America. Our efforts continue to drive greater consumer awareness and preference of
the Capital One brand. Capital One now has one of the most powerful brands in financial services with 97% total
brand awareness. For the second year in a row, Capital One has had an advertisement in the top ten for the most
recalled new ads. In a brand recall survey conducted by Ad Age®/IAG,
®Capital One’s “Payback” ad finished 4th in the
rankings of all television advertisements in 2005.
Creating a winning brand takes more than making memorable television ads. It takes living up to our brand promise to our
customers. Each of our businesses is focused on delivering great value without the hassle to our customers every day.
Our People Drive Our Success
This year was the most transformational year in the company’s history, and our people delivered tremendous results. Our
associates stepped up to deliver on some of the most audacious goals in financial services. Our Executive Committee
continued to provide exceptional leadership. Our Board of Directors provided strong governance and guidance, and we
added to our Board’s already formidable capabilities in 2005 by welcoming Pierre E. Leroy and E.R. “Bo” Campbell as directors.
Our people philosophy sounds simple – we search the world to find great people and then give them an opportunity to be great.
Attracting great talent is one of the most talked about and least delivered on things in business. At Capital One, we’ve always
made finding and empowering the best people the number one job of every manager in our company. The power of attracting
great people outweighs everything else we do. Our success over the years is directly attributable to the tremendous skills and
determination of our associates. I feel lucky and proud to work alongside of them as we continue our company’s journey.
Richard D. Fairbank
Chairman and Chief Executive Officer
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