Capital One 2005 Annual Report Download - page 60

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its marketing capabilities and credit risk management will enable it to originate new credit card accounts that exceed the
ompany’ s return on investment requirements. C
A
uto Finance Segment
The Company’ s Auto Finance segment consisted of $16.4 billion of managed U.S. auto loans as of December 31, 2005,
marketed across the full credit spectrum, via direct and dealer marketing channels.
The 2005 acquisitions of Onyx Acceptance Corporation, the Key Bank non-prime portfolio, and the National Bank, along
with its auto lending business, have strengthened the Auto Finance segment’ s competitive position. The acquisitions have
enhanced our ability to lend across the entire credit spectrum and provided operating scale. The Company expects to integrate
these businesses more fully in 2006, and realize cost efficiencies and marketing synergies that will drive originations growth.
The Company believes that its strong risk management skills, increasing operating scale, full credit spectrum product
offerings and multi-channel marketing approach will enable it to continue to increase market share in the Auto Finance
industry.
Global Financial Services Segment
The Global Financial Services segment consisted of $23.4 billion of managed loans as of December 31, 2005, including
international lending activities, small business lending, installment loans, home loans, point of sale financing and other
consumer financial service activities.
The Company expects continued loan, credit and profit pressure from a deteriorating credit environment in its U.K. business.
Despite this pressure, the Company continues to expect profitable long term growth from its U.K. business and is
xperiencing strong results from its North American business. e
B
anking
With the acquisition of the National Bank on November 16, 2005, Capital One entered the branch banking market. Because
the transaction closed in the middle of the quarter, Hibernia’ s results were not separately reported as a segment in the fourth
quarter results. Beginning in the first quarter of 2006, a new banking segment will be disclosed, but it will not have the same
mix of business as the former National Bank.
Hibernia has experienced a significant increase in deposits since the Gulf Coast Hurricanes in August 2005. The increase is
partially due to customers receiving federal funds and insurance payments relating to the hurricanes. The Company expects
that some of these incremental deposits will permanently remain with Hibernia, while others will be withdrawn and used for
building or reinvestment in the Gulf Coast area. re
The Company expects integration costs of around $90 million in 2006, and continues to expect total integration costs and
operating synergies to be broadly in line with original estimates when the Hibernia transaction was announced in March
2005.
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