Card Issuer Profile: Capital One

SUMMARY

Overview

Introduction

Since its founding in 1995, Capital One has grown from a innovative and balance-chasing monoline card issuer in the US to a diversified bank with an international presence. This profile focuses primarily on Capital One's card operations, providing an overview of its current market positioning and outlook for the future.

Reasons to Purchase

• Understand the key elements of Capital One's strategy and approach in the card issuing space, and see how this can be applied to your business.
• Learn how this strategy positions Capital One for the future and where its biggest opportunities may lie.
• See Capital One stacks up in Datamonitor's unique Competitor Benchmark exercise

TABLE OF CONTENTS

• Overview
  • Catalyst
  • Summary
• Table of Contents
• Table of figures
• Table of tables
• Capital One
  • Key findings
  • Company overview
    • Background
    • Ownership and Management
      • Capital One Board of Directors
      • Employees
      • Management values
    • Company structure
    • Geographic coverage
  • Strategic focus
    • In the US, Capital One's strategic focus has changed since the 1990s
      • Capital One has been diversifying its revenue stream by developing other business areas
      • In addition, Capital One has refocused its issuing business on transactors
    • In the US, Capital One has been improving the recognition of its brand
    • In the UK, Capital One's strategy has focused on attracting new cardholders by offering one of the longest interest free transfer periods in the market
      • In the UK, Capital One continues to focus primarily on cardholders who revolve a balance
      • Capital One has been trying to establish itself as a financial services provider by offering loans, mortgage and savings products
    • In Canada, Capital One's strategy involves offering a range of cards for different types of consumer
      • However, some of the cards now being offered suggest Capital One is slowly adopting its US strategy in Canada
  • Card statistics
    • Number of cards
    • Balances outstanding
      • Balances outstanding in the US have seen modest growth
      • In the UK, difficult trading conditions have resulted in slow growth
      • The growth of balances outstanding in Canada has also slowed
  • Key financials
    • Profit and loss account
      • The growth in profits has been fueled by growing revenues and keeping costs under control
    • Balance sheet
  • Card product offering
    • In the US, Capital One has a wide range of cards
    • Capital One has a 'No Hassle' loyalty program in the US
      • Cards which are part of the No Hassle Cash program earn cashback
      • A variation of the program is the No Hassle Miles program
    • The high end cards in the US have added services and benefits for the cardholder
    • In the UK, Capital One has a far more limited range of credit cards
    • In the UK, Cardholders have the opportunity to select the appearance of their Capital One card
    • In Canada, Capital One's range of cards is smaller than in the US, but it employs the same strategy
    • In Canada, two of Capital One's cards track the base rate
  • Company outlook
    • Capital One has moved into a much stronger position as a result of diversifying its business
      • One issue could be a reduction in interchange fees
    • Overseas, it seems that Capital One will continue to struggle in the UK market and thrive in Canada
      • Capital One could try to adopt its US strategy for the UK
      • The outlook is brighter in Canada
    • Expansion to other markets is a possibility
    • Capital One has yet to enter the co-branding arena
    • Nonetheless, Capital One has a bright future
  • Datamonitor Competitor Benchmark
• APPENDIX
  • Definitions of terms used in this report
    • Affinity card
    • Charge card
    • Co-branded card
    • Commercial card
    • Credit card
    • Premium cards
    • Private label card
  • Data relating to the graphics in this profile
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Capital One Board of Directors, 2006
    • Table 2: Capital One Executive Officers, 2006
    • Table 3: Capital One branches by region, 2006
    • Table 4: Charge-off rates for key US issuers, 2004-2006
    • Table 5: Capital One's classification of credit ratings
    • Table 6: Capital One Card offering, US, 2007
    • Table 7: Capital One No Hassle Miles redemption rates, 2007
    • Table 8: Capital One Credit Cards, UK, 2007
    • Table 9: Capital One Credit Cards, Canada, 2007
    • Table 10: Scorecard logic, part one
    • Table 11: Scorecard logic, part two
    • Table 12: Capital One - Cards in issue, 2001-2005
    • Table 13: Capital One - Balances outstanding, 2002-2006
    • Table 14: Capital One's transaction values, revenues, outstandings and profits from its US Cards business, 2001-2006
    • Table 15: Capital One's income statement, 2003 - 2006
    • Table 16: Capital One's balance sheet, 2003-2006
    • Table 17: Current relevant Datamonitor publications, 2007
    • Table 18: Future relevant Datamonitor publications, 2007
  • List of Figures
    • Figure 1: Capital One has evolved from monoline issuer to a fully fledged financial services supplier, 1990s-2007
    • Figure 2: US Cards is the biggest contributor to Capital One's net income
    • Figure 3: Capital One has a limited global presence, 2007
    • Figure 4: The Capital One business has diversified, 1999-2006
    • Figure 5: Transaction values have grown more quickly than outstandings, Capital One, 2001-2006.
    • Figure 6: Capital One enjoys a high level of brand awareness, US, 2006
    • Figure 7: Most of Capital One's cards are in issue in the United States
    • Figure 8: The growth of Capital One's outstanding balances in the US has slowed, 2001-2006
    • Figure 9: The level of balances outstanding in the UK has stabilized, Capital One, 2002-2006
    • Figure 10: The growth in balances outstanding in Canada has also slowed, Capital One, 2002 - 2006
    • Figure 11: Capital One has seen strong profit growth, 2001-2005
    • Figure 12: Capital One has doubled its profits in four years, 2003-2006
    • Figure 13: Capital One has more than doubled profits from its cards business, US, 2001-2006
    • Figure 14: Capital One's balance sheet has grown with the acquisitions of Hibernia and North Fork, 2003 - 2007
    • Figure 15: Capital One's Cashback program is marketed for its simplicity, 2007
    • Figure 16: Capital One cardholders in the UK can choose the appearance of their credit card
    • Figure 17: Datamonitor Competitor Benchmark, Capital One, 2007