Capital One Financial Corporation (NYSE:COF) Q4 2023 Earnings Call Transcript

Let’s call it the delayed charge-off effect, that if you think about all those charge-offs that would have happened — many of that would have happened in the pandemic, but didn’t. Some of them may have gotten reprieved for the long run, but a bunch of others we certainly have felt are going to charge-off over time. And that is a temporary effect that we think has been playing out over this normalization thing. It’s not — we have ways that we try to measure it, but nobody can precisely measure this. But this is also something that leads to an elevation of charge-offs relative to probably what’s an equilibrium. So if I speak from Capital One’s point of view, our guidance was to guide you to the leveling-off. Because of the lower recoveries effect right now, that’s leveling off at 15% above 2019.

The underlying credit dynamics seem very similar to me, to what was there in the past. I think there, even as we keep a wary eye on the economy, there is some just sort of actuarial good guys making their way through the business and all the other things being equal. That can help the credit metrics more and more show that they’re strikingly similar to what was there before the pandemic. So pulling way up, I don’t think, and again, I’ll speak, I don’t think things have shifted. I think we’re seeing some trends playing out, but for Capital One we’re — we feel great about where we have stabilized and we see really good — a good assessment of our future.

Jeff Norris: Well, thank you very much everyone for joining us on the conference call tonight, and thank you for your continuing interest in Capital One. The Investor Relations team is available this evening to answer further questions if you have them. Have a great evening.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.