Card Issuer Profile: Capital One

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Card Issuer Profile: Capital One
Company Profile, June 2007, 2236 €

Description

IntroductionSince 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.ScopeHighlightsReasons to PurchaseUnderstand 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.

Sommaire

Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
Table of tables 4
Capital One 5
Key findings 5
Company overview 5
Background 5
Ownership and Management 6
Capital One Board of Directors 7
Employees 7
Management values 8
Company structure 8
Geographic coverage 9
Strategic focus 10
In the US, Capital One's strategic focus has changed since the 1990s 10
Capital One has been diversifying its revenue stream by developing other business areas 10
In addition, Capital One has refocused its issuing business on transactors 12
In the US, Capital One has been improving the recognition of its brand 14
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 15
In the UK, Capital One continues to focus primarily on cardholders who revolve a balance 15
Capital One has been trying to establish itself as a financial services provider by offering loans, mortgage and savings products 16
In Canada, Capital One's strategy involves offering a range of cards for different types of consumer 16
However, some of the cards now being offered suggest Capital One is slowly adopting its US strategy in Canada 16
Card statistics 16
Number of cards 16
Balances outstanding 17
Balances outstanding in the US have seen modest growth 17
In the UK, difficult trading conditions have resulted in slow growth 18
The growth of balances outstanding in Canada has also slowed 19
Key financials 20
Profit and loss account 20
The growth in profits has been fueled by growing revenues and keeping costs under control 21
Balance sheet 23
Card product offering 24
In the US, Capital One has a wide range of cards 25
Capital One has a 'No Hassle' loyalty program in the US 26
Cards which are part of the No Hassle Cash program earn cashback 26
A variation of the program is the No Hassle Miles program 27
The high end cards in the US have added services and benefits for the cardholder 28
In the UK, Capital One has a far more limited range of credit cards 29
In the UK, Cardholders have the opportunity to select the appearance of their Capital One card 29
In Canada, Capital One's range of cards is smaller than in the US, but it employs the same strategy 30
In Canada, two of Capital One's cards track the base rate 31
Company outlook 31
Capital One has moved into a much stronger position as a result of diversifying its business 31
One issue could be a reduction in interchange fees 32
Overseas, it seems that Capital One will continue to struggle in the UK market and thrive in Canada 32
Capital One could try to adopt its US strategy for the UK 32
The outlook is brighter in Canada 32
Expansion to other markets is a possibility 33
Capital One has yet to enter the co-branding arena 33
Nonetheless, Capital One has a bright future 33
Datamonitor Competitor Benchmark 34
APPENDIX 37
Definitions of terms used in this report 37
Affinity card 37
Charge card 37
Co-branded card 37
Commercial card 37
Credit card 37
Premium cards 37
Private label card 38
Data relating to the graphics in this profile 38
Methodology 39
Further reading 40
Ask the analyst 41
Datamonitor consulting 41
Disclaimer 41
List of Tables
Table 1: Capital One Board of Directors, 2006 7
Table 2: Capital One Executive Officers, 2006 7
Table 3: Capital One branches by region, 2006 12
Table 4: Charge-off rates for key US issuers, 2004-2006 13
Table 5: Capital One's classification of credit ratings 25
Table 6: Capital One Card offering, US, 2007 26
Table 7: Capital One No Hassle Miles redemption rates, 2007 27
Table 8: Capital One Credit Cards, UK, 2007 29
Table 9: Capital One Credit Cards, Canada, 2007 31
Table 10: Scorecard logic, part one 35
Table 11: Scorecard logic, part two 36
Table 12: Capital One - Cards in issue, 2001-2005 38
Table 13: Capital One - Balances outstanding, 2002-2006 38
Table 14: Capital One's transaction values, revenues, outstandings and profits from its US Cards business, 2001-2006 39
Table 15: Capital One's income statement, 2003 - 2006 39
Table 16: Capital One's balance sheet, 2003-2006 39
Table 17: Current relevant Datamonitor publications, 2007 40
Table 18: Future relevant Datamonitor publications, 2007 40
List of Figures
Figure 1: Capital One has evolved from monoline issuer to a fully fledged financial services supplier, 1990s-2007 6
Figure 2: US Cards is the biggest contributor to Capital One's net income 9
Figure 3: Capital One has a limited global presence, 2007 10
Figure 4: The Capital One business has diversified, 1999-2006 11
Figure 5: Transaction values have grown more quickly than outstandings, Capital One, 2001-2006. 14
Figure 6: Capital One enjoys a high level of brand awareness, US, 2006 15
Figure 7: Most of Capital One's cards are in issue in the United States 17
Figure 8: The growth of Capital One's outstanding balances in the US has slowed, 2001-2006 18
Figure 9: The level of balances outstanding in the UK has stabilized, Capital One, 2002-2006 19
Figure 10: The growth in balances outstanding in Canada has also slowed, Capital One, 2002 - 2006 20
Figure 11: Capital One has seen strong profit growth, 2001-2005 21
Figure 12: Capital One has doubled its profits in four years, 2003-2006 22
Figure 13: Capital One has more than doubled profits from its cards business, US, 2001-2006 23
Figure 14: Capital One's balance sheet has grown with the acquisitions of Hibernia and North Fork, 2003 - 2007 24
Figure 15: Capital One's Cashback program is marketed for its simplicity, 2007 27
Figure 16: Capital One cardholders in the UK can choose the appearance of their credit card 30
Figure 17: Datamonitor Competitor Benchmark, Capital One, 2007 34