Magazine article American Banker

Credit Line Increases Fuel Growth at Capital One

Magazine article American Banker

Credit Line Increases Fuel Growth at Capital One

Article excerpt

Byline: Kevin Wack

After two years of slimming down, Capital One Financial (COF) is finally seeing growth in its U.S. credit card loan portfolio.

The $290 billion-asset company reported a modest 1% year-over-year increase in domestic card loans at the end of the second quarter, which was 3-6 months earlier than Capital One had projected.

One key factor in the revival of loan growth was Capital One's decision to start increasing credit lines for more of its existing card holders, according to Chief Executive Richard Fairbank.

Like other credit card companies, McLean, Va.-based Capital One was forced to alter its approach to line increases after the enactment of the 2010 Credit Card Accountability Responsibility and Disclosure Act. That law, known as the CARD Act, requires card issuers to consider borrowers' income before raising their credit lines.

By the end of 2012, credit line increases across the industry were only 35% as frequent as they were in mid-2008, according to a report last year by the Consumer Financial Protection Bureau. Those figures include both line increases that were requested by customers and those that were proactively put in place by card issuers.

Capital One's line-increase program went through what Fairbank described as "a bit of a brownout" as it was retooled to comply with the new regulations.

"We kind of got to a good place in the latter part of last year," Fairbank explained during a conference call with analysts Thursday. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.