UPDATE: Capital One Credit-Card Delinquencies Rise In August

(Updates stock price, and adds analysts earnings estimates and stock recommendation.)

 
    DOW JONES NEWSWIRES 
 

Capital One Financial Corp. (COF) reported a continued increase in delinquencies for U.S. credit-card customers in August, but charge-off levels eased from July.

The credit-card lender turned bank in recent months has been struggling with increasing credit concerns as the recession threatens its balance sheet. The delinquencies give a glimpse of issuers' potential losses and how much they may need to set aside in reserves.

Following the report on August delinquencies, analysts at Calyon Securities raised their estimate for 2009 earnings at Capital One to 73 cents a share, and also raised estimates for earnings in 2010 and 2011.

But the analysts downgraded the shares to underperform from outperform after a sharp rise in the stock price and because "we believe valuations could be peaking for lenders when taking into account the considerable uncertainty that remains."

Shares of Capital One were down 4.4% at $36.62 in late morning trading.

Last week, Citigroup Inc. (C) analysts said Capital One likely has seen the worst of credit-card charge-offs - loans the lender doesn't think it can collect but aren't in default yet.

Charge-offs declined to 9.32% in August from 9.83% in July in its U.S. credit-card business and fell to 8.6% from 9.76% internationally. However, auto-finance charge-offs rose to 4.31% from 4.26%, the company said in a filing with the Securities and Exchange Commission.

In its U.S. credit-card business, 30-day delinquencies rose to 5.09% last month from 4.83% in July, while auto deals were flat at 9.42% and international delinquencies eased to 6.67% from 6.68%.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]