Capital One 2006 Annual Report Download - page 7
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5
Larry Klane, our head of GFS, has provided strong leadership, supported
by a team of incredibly talented line executives who manage each of
the portfolio businesses.
GFS is a tale of two continents. Our North American businesses are
thriving as our UK business continues to face a challenging consumer
credit environment. Despite the UK, GFS had a strong year in 2006,
with net income of $274.0 million, up 47% from last year. Managed
loans grew $3.6 billion, or 15%, in 2006. GFS continues to provide
growth and diversification to the company.
In 2006, small business profits and outstandings grew significantly,
while credit remained stable. We are the second-largest issuer of small
business credit cards in America. In addition, we offer a wide spectrum
of financial solutions to our small business customers, including lines
of credit and Small Business Administration loans. Purchase volumes
on our small business cards grew at a healthy 15% clip this year
and our 15-minute loan approval process continues to be a big hit
with our small business customers. 2006 marked the first year that
we’ve advertised small business nationally with commercials poking
good-natured fun at banks who “think small about small business.”
We’ll continue to leverage our multi-channel marketing and national
brand to deliver superior products and service to our millions of small business customers.
Similarly, our installment lending and healthcare finance businesses continue on a strong,
upward trajectory.Our installment loans business was the largest contributor to overall GFS
loan growth in 2006. The interest rate environment helped installment loan growth as our
fixed rate products were an attractive alternative to variable rate home equity lines. Our
healthcare finance business is taking off. Doctors are gravitating toward our customer-
friendly products. They appreciate the ability to provide their patients with hassle-free
financing for a wide range of medical services, from orthodontics to fertility treatments.
Our home equity business continues to thrive. Capital One Home Loans drives growth by
delivering a brand-defining online experience where we help our customers get great rates
for mortgages, home equity loans, and home equity lines of credit through a unique,
user-friendly consultation process.
We are also building a winning franchise in Canada. We’re a national player in Canada in
credit cards, and we’re growing our business and our brand rapidly. Our Canadian business
is well-positioned to make even bigger contributions to the bottom line going forward.
The UK continues to present a very challenging consumer credit environment for the
industry. Credit across consumer lending in the UK degraded markedly in 2006, primarily
“Our new card
platform will fuel
innovation by
enabling us to
create more
customized offers
while dramatically
improving our
speed to market.”