Capital One 2013 Annual Report Download - page 6

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Capital One’s stock price closed the year at $76.61 per share, up strongly
from $57.93 at the end of 2012. Our Total Shareholder Return (TSR)
in 2013 was 34.2%, slightly below the median TSR of 37.4% for the
KBW Bank Index. Capital One’s three-year TSR was 84.1%, first among
the 24 banks in the Index. Since we went public in November 1994,
Capital One’s TSR is 1,556%, well ahead of the KBW Bank
Index return of 161% over the same time period.
Resilient Businesses,
Attractive Returns
The credit card business, including both domestic and international cards,
delivered net income of $2.62 billion in 2013, about $1 billion higher than
in 2012, with help from strong credit trends and the absence of the
significant allowance build and purchase accounting impacts we incurred
in 2012. Ending loans of $81.3 billion were down about 11.4% from the
prior year, driven by the sale of the Best Buy portfolio as well as planned
run-off of about $2 billion. Purchase volume growth was strong, reflecting
our focus on transactors and the acquisition of the HSBC U.S. credit card
business. Credit trends remained stable at historically strong levels.
Our credit card business continues to be a great business, with risk-adjusted
returns that are structurally high and sustainable. But our card business
will continue to feel the effects of our strategic decisions to exit the
Best Buy relationship, avoid high-balance revolvers, and allow planned
run-off of another $1 billion in 2014. Also, new regulations may require us
to allocate more capital to the card business. As a result, loan growth will
be muted and bottom-line return on equity will be lower, but we expect returns
to remain well above hurdle.
Our card business is delivering strong returns and capital generation. We
believe it is in an excellent position to sustain superior performance over the
long term. We are focused on innovation and new product development, and
we expect the card business to return to growth in the latter half of 2014.
Our consumer banking business, which encompasses auto finance,
home loans, retail banking and Capital One 360, delivered $1.45 billion
of net income in 2013. Capital One auto finance posted another year of
Capital One continues to bring
compelling products to the
marketplace with the launch of the
new cash back rewards card,
Quicksilver®. Customers earn 1.5%
cash back on every purchase,
everywhere, every day without the
hassle of rotating categories or
quarterly signups. Like Quicksilver,
Venture® rewards and Spark®
business are simple, straightforward
products that offer some of the best
rewards programs in their categories.