Capital One 2011 Annual Report Download - page 7

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to win accolades from consumer-finance media. It made Money®
magazine’s “100 Best Money Moves” lists in both 2010 and 2011, and in
2011 CBS MoneyWatch named it the “Best Airline Miles Reward Card.”
Capital One Cash, which premiered in August, has been praised
by the Associated Press as a great “no strings attached”
cash-back product, and more than 20 media outlets have
included it on their “Best Credit Card” lists. Spark, a double
miles small business credit card, was launched in October.
It’s off to a good start and according to the Wall Street
Journal® is “raising the bar for small businesses by offering
the highest value rewards in the marketplace.”
We continued to gain traction in the partnership segment of the credit card market. We added Kohl’s® and
the Hudson’s Bay Company® to our card franchise, and integrated the Sony® partnership. In our Domestic
Card business, the Kohl’s program added $3.6 billion in loans and more than 20 million customer accounts,
while Sony contributed $700 million in loans and 600,000 customers. Hudson’s Bay Company added
$1.4 billion in loans to our International Card business.
Consumer Banking at Capital One is strong and growing
Our Consumer Banking businesses include retail deposits, a mortgage portfolio, and auto finance.
The Consumer Banking business delivered $810 million in net income in 2011, driven by the strong
performance of the auto finance business and growth in deposits with improving interest expense
rates. Loan balances were up modestly, as strong growth in auto loans was partially offset by expected
runoff of the mortgage portfolio. Deposits grew 7% from the prior year, while interest expense improved
by 29 basis points.
In retail deposits, where we faced substantial headwinds in the form of interest rates and regulatory changes,
we moved decisively to increase revenue and cut costs. The business also improved its infrastructure and
execution capabilities. We’re nearing the completion of improvements to our sales and servicing infrastructure,
which will help us drive growth and profitability in retail deposits. We’ve also recruited 20 senior retail banking
executives, all highly talented and with successful track records. We believe we are now well on our way
toward becoming a great sales and service organization.
Capital One Auto Finance had an outstanding year, with strong profitability and returns. Losses have risen
modestly but at 1.72% remain near historical lows. Originations increased to $12.5 billion, up 60% over