Capital One isn't just concerned with what's in your wallet; it's interested in your bank account as well. The company is best known as one of the largest issuers of Visa and MasterCard credit cards in the US, but it also boasts a banking network of approximately 1,000 branches, mainly in New York, New Jersey, Louisiana, Texas, and the Washington, DC area. Subsidiary ING Direct offers online and direct banking without branches. Capital One, which serves more than 50 million customers in the US, Canada, and the UK, also has units that offer auto financing, write home loans, sell insurance, and manage assets for institutional and high-net-worth clients.
Capital One's credit card business makes up its largest business segment (contributing around 65% of revenues). The company works hard to cater to its credit card customers and tries to keep the custom in customer. Cardholders can customize their cards' appearance, rates, and rewards. Products range from platinum and gold cards for preferred customers to secured cards for customers with poor or limited credit histories. Capital One is focused on growing its customer base and strengthening its loan portfolios.
Much of its recent growth has been through acquisitions. In 2011 the company boosted its credit card business with the acquisition of GE Capital's $1.3 billion Hudson's Bay credit card portfolio, tripling the number of Canadian customer accounts Capital One services. That year Capital One also acquired Kohl's existing $3.7 billion private-label credit card portfolio. Capital One grew its US credit card business once again with the 2012 acquisition of HSBC's US card portfolio for some $2.6 billion.
The company's foray into banking, which began in 2005, has allowed it to use deposits to fund its lending, rather than relying on capital markets. The company's focus on consumer lending has shielded it somewhat from the downturn in commercial markets. Capital One added more than 7 million new banking customers and increased loans and deposits in 2012 when it bought online bank ING Direct from ING Groep for some $9 billion in cash and stock. The deal gave ING Groep ownership of about 10% of Capital One.
Company performance in 2011 was bolstered by lower credit costs due to improved loan credit quality. Net income increased by 15% that year as Capital One also reduced provisions for mortgage repurchase losses. – less