Now we are seeing stabilization come more quickly at the lower end of the market. In fact, over the last few months, our delinquencies in these segments have essentially stabilized on a seasonally adjusted basis. And our upmarket segments are sort of just a little bit behind that. So now, I don’t think this is necessarily a description of the marketplace per se. This is what we see at Capital One. Our performance has been assisted by some of the underwriting changes that we made over the past couple of years, especially in response to credit to what we anticipated would be the impact of credit scores inflating FinTech’s flooding the market. So as we’ve been talking about really for a couple of years now, we — in our originations and overall in our credit policy, we were trimming around the edges for things that we saw or risks that we anticipated, and this has contributed, I think, to strength and stability and performance that’s now contributing to what we see here.
In terms of spend, the spend is basically — pretty — when we look at spend per customer, this has really moderated after the surge of spending coming out of the pandemic. So year-over-year, I’m [indiscernible] an overall Capital One point. Year-over-year spend growth per customer has been roughly flat for several months. So the growth in spend that you’re seeing in our metrics is really being driven by new account origination. Now with respect to the various segments, the spend on the — at the lower end of the marketplace is certainly probably the most moderated, although, we — it moderated first, we’ve seen spend growth across our segments. Sort of fairly moderated, but I’d say the biggest effect on the moderating side has been in the lower end of the market.
Mihir Bhatia: Got it. Thank you. That’s quite helpful. And then maybe just turning to NIM very quickly. Can you just talk about some of the puts and takes on NIM in the near term, particularly on the deposit competition side. Any thoughts on where deposit betas go? What are you seeing from a competitive standpoint? Thank you.
Andrew Young: Yeah. With respect to beta, as we’ve discussed in previous calls, there’s really a couple of key factors that are impacting betas. The first is product mix. Sort of the rotation of customers across products. And then, the second is competitive pricing. And within that, I would include the notion of just deposit pricing lags that we’ve talked about. And so for us, the quarter-over-quarter beta with that lag effect was something like 160%. Our cumulative beta now stands at $57 million. And so that getting factored into NIM as we look ahead on that dimension, particularly assuming if rates do stay higher for longer, I wouldn’t be surprised if there continues to be some upward pressure on beta at least in the near term, driven by those factors that I described, the pricing and product mix piece.
So beyond that then, in the NIM, we have seen spreads widen a bit here and wholesale funding costs are up a bit. And I think Rich talked about suppression in card, but depending on the path of credit, there’s the potential at least for increased revenue suppression. So I would lump all of those three things together as potential headwinds. But from a tailwind perspective, we can continue to see growth in card and particularly revolving card balances as a percent of the balance sheet like you saw this quarter. And then the other thing that I would note, even though cash balances remain elevated relative to historical standards, I think we will see it settle out at a level that’s higher than pre-pandemic, but ultimately lower than where we are today as you look ahead over multiple quarters.
So those are really the primary factors that I would say are at play with respect to NIM.
Jeff Norris: Next question please.
Operator: Our next question comes from Arren Cyganovich with Citi. Your line is open.
Arren Cyganovich: Yeah. Just touching on the last discussion on net interest margin. The card loan yields expanded, I think, 89 basis points and that was quite a bit higher than the base rate expansion for the quarter. You mentioned higher revolve rates, is that part of what you’re seeing there? And how do the revolve rates compare today versus maybe where they were pre-pandemic?
Andrew Young: Yeah. So part of it, Arren, is just said, if you’re looking at yield as opposed to margin is you get a tailwind just from the Fed rate changes, but the other primary and larger factor than the Fed changes is, I would say, largely seasonality which does — we typically see revolve rates in the third quarter just naturally be higher than they are throughout the year. And we also tend to see a bit more on the late fee piece there. So there is a seasonality dimension in terms of where we are with revolve rates going forward, I’ll let Rich talk a little bit about the trends that we’re seeing in the portfolio.
Richard Fairbank: Yes, Arren. So overall, in our Domestic Card business, revolve rates are basically where they were. So for example, third quarter 2023 revolve rates right on top of third quarter 2019, but it’s very sort of very different within segments. The place that the revolver rate is quite a bit higher is in our partnerships business because we have the Walmart portfolio. We didn’t have before the pandemic pretty much everywhere else across our branded book revolve rates are a little bit generally speaking a little bit to quite a bit lower than they were before. But the net impression I would leave with you, so our branded book overall is somewhat lower and the partnerships have offset that.
Arren Cyganovich: Got it. And then on the marketing, it looks like it was down just slightly year-over-year, still almost double where it was from a pre-pandemic perspective. Have you essentially hit kind of an — almost a peak here in terms of marketing dollars and how do you think the expenses will go from there with respect to that?
Richard Fairbank: Okay. Well, Arren, the — on marketing, so just pulling up total company marketing was up 10% compared to the prior quarter and flat year-over-year. let’s just pull up and talk about the big drivers of our marketing. First, we continue to really like the opportunities we’re seeing in the market. Including additional — the opportunities that we get in expanding channels and growing the number of card products we have, the benefit from our technology transformation that sort of is everywhere in what we do as we leverage more data. We’re able to take advantage of powerful machine learning models, create customized better experiences for consumers. So that continues to have a lot of traction, and we are leaning into that.
We also — a very important part of our marketing spend and a thing we’re really leaning into is our focus on heavy spenders. So when we think about our quest for heavy spenders, it really goes back to 2010 when we launched our Venture card, and that was the beginning of a strategic push that we have continued and accelerated ever since. And that involved more than just putting an attractive product out there. Heavy spenders, of course, to win with heavy spenders, we need great servicing, jaw-dropping customer experiences, of course, great value propositions. And this takes a significant investment in upfront promotions and in marketing and in brand building. And this is all about my observation, all the years of doing this business and watching players who succeed here and those who get less traction is very much about a sustained investment and the — ultimately, the brand that one builds.
