Capital One Says 2007 Profit Short of Expectations Due to Credit Crisis
- Jan 10, 2008
New York–Stocks fell early on Thursday following a profit warning from Capital One Financial Corp., prompting new panic about the credit markets, The New York Times reported Thursday.McLean, Va.-based Capital One said its 2007 profit will be less than expected due to growing loan delinquencies and legal reserve costs in the fourth quarter. The credit card company is taking a $1.9 billion loan loss provision, which includes about $1.3 billion in charge-offs.The company’s statement corroborated some analysts’ concerns that other credit classes have been damaged by the subprime mortgage market collapse and that future corporate earnings may be lessened by the declining economy.Citigroup Inc. and Merrill Lynch & Co. are supposedly in talks with foreign governments to obtain capital and offset credit crunch losses, according to The Wall Street Journal. After Capital One’s announcement, the Dow Jones industrial average dropped 86.09, or 0.68 percent, to 12,649.22 in early trading. The Standard & Poor’s 500 index declined 12.73, or 0.90 percent, to 1,396.40. The Nasdaq composite index was down 24.06, or 0.97 percent, to 2,450.49.