Capital One Financial (COF) 23 Jul 212021 Q2 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Capital One Second Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer period. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. President Vice Senior Norris, of Finance. Jeff may you begin. Sir,

everyone Thanks call. second One's Holly. welcome very And to quarter Capital much, XXXX earnings conference

usual, Internet, live the webcasting capitalone.com and Capital we Internet. links at As access from the To there. One's over website call log please the the follow on to on are

Capital materially the forward-looking forward-looking as the contain of our any Information results undertake a statements this Officer. statements. Rich otherwise. and second website, Capital walk release, the Mr. Richard you press presentation this presentation. or With update Please One does cause then to factors me in this results. please or copy materials. Young, the to through of any may those materials that today's Quarterly contained any not presentation we've on financial and particular indicated press dates click discussion regarding performance from Fairbank, addition a Chief of or XXXX and One's Andrew in forward-looking and financials, Financial Officer; on and included of One's will and only are date quarter in speak statements. revise Mr. To events, Release. could new information, result whether differ Chief information, a Capital obligation click One's to In access Capital described release presentation Andrew future Investors, Capital go to Chairman summarizing Executive Numerous Earnings the our today note, as actual One's

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moving to a $X.X on basis, and X largely presentation. an of item, of loans Period-end billion impact investments million increased income, billion. quarter $X.X held loans. or a in for for to in or this $XXX build. sequential share $X.X offset of GAAP legal common Jeff. X% Net good the quarter, $X.X X%, grew the $X.X $X.X the of of Slide the pre-provision international purchase driven quarter earnings in per portfolio quarter, strong of with Capital card billion during benefit On start was commercial earned release. $XX $X.XX a a the the investment effect allowance of Included charge-offs domestic $X.X Revenue the $X.X in afternoon everyone. partnership grew In our of results for ago. billion billion absence by quarter One second the linked tonight's the And card on a diluted billion adjusting the on Thanks, billion I'll mark as loans slightly of volume quarter held consisted share. a Snowflake provision in to and in per million held loans non-interest earnings by We quarter. the The recorded was moved $X.XX. inclusive quarter of sale sale billion for of reserve the

cover by driven economic the allowance, of and an observed allowance strong Slide performance $X.X released X, improved changes will We Turning billion our to quarter. the primarily I credit in in outlook.

Slide be to by to Turning we segment. X, ratios coverage allowance provide

segments, largely I just coverage reflecting allowance the the dynamics described. see quarter can declined You in all across

continued pre-pandemic of is remain outcomes. to ratios coverage allowance a absorb well as due economic levels wide However, our to above built range uncertainty

from now XX.X% is X.X%, down coverage domestic last quarter. Our card

our portfolios. the XX loss-sharing Coverage X.X%. of agreements points is coverage partnership basis about branded Recall driven card Our branded business coverage to some our declined that the is consumer largely in difference domestic XX.X%. between and in by

the aided and largest driver improved performance auto single in to banking values to Coverage the our business with credit declined energy being in addition continued improvement points XX coverage. In X.X% about outlook, high basis reduction the strong in economic commercial our historically portfolio.

to discuss Page X. liquidity. Turning I'll now

can quarter to during be first ratio was liquidity -- the LCR You the requirement. during continues the The our coverage XXX%. well regulatory average XXX% see preliminary above

Our liquidity securities, lower driven reserves ended capacity total federal cash, approximately at home loan from cash bank in $XX liquidity $XXX billion balances. was the billion, the and by quarter decline ending

our loan declined position repurchases. and share to redeployed wholesale as modest net in increase quarter, cash maturities, growth, it was in Our securities a funding the portfolio,

Moving I'll margin. now interest X. to discuss Page net

where quarter. was lower that You our points linked-quarter see driven quarter decrease associated in by X.XX%, higher portfolio seasonal partially payments. from by volume higher NIM the the card decline revolve one lower second prior The the in our in day by interest than largely and was the net were impacts exacerbated favorable XX basis transactor in more These can margin was impact typical yield offset rate quarter.

to X. turning will Lastly, our capital cover Slide position. I

capital was earnings down the end quarter, the capital by at X of basis growth. from the second ratio growth points quarter. XX Loan were first Our common offset XX.X% largely Tier and equity actions

the released results of stress the their quarter, test. Federal the During Reserve

Our on X Fed stress in X.X%. by is capital resulting requirement October a total buffer this requirement of year X.X% the which will of capital be effective

can continue it's many results we one is stress and we year-to-year Fed's around this that around that to CETX use While testing modeling, capital of XX%. process. capital our in from to decline note we important a estimate SCB, need that saw move internal our Based in on our only meaningfully planning factors are year's the

measures. Fed's allowed repurchases, billion $X.X capital under to second full preservation Turning we share common stock the of in repurchased quarter, the the amount

Board We current of have of our $X.X approximately billion. billion authorization $X.X remaining

the reduced XXXX of of dividends. up second half common per expect Therefore, capital in dividends quarters of quarter make $X.XX $X.XX our dividend our dividend Fed's by In fourth was we to paying we level level the $X.XX reduced move the to due XXXX let those continue the dividend Now quarter reduced special share. historical an to for to between on measures. from chose caution. third XXXX. level reduced The of of of third in a $X.XX the to We and quarter dividend the out the two me preservation of for abundance of difference XXXX, this

will In in addition per common Rich. over subject dividend expect $X.XX dividend, to third per of the quarterly stock quarter, With both board be the $X.XX the I our approval. share to increase share $X.XX our Rich? will dividend to dividend stock we call to increase to quarterly that, the special common and from to turn $X.XX the special

to domestic of Credit offsetting XXXX, good growth revenue volume year-over-year Strong more results year-over-year second everyone. modest Thanks, I'll on Card loan on evening Credit and drove And shown the results Slide quarter business. than for with increase provision which purchase in our XX. compared are significantly. a XX function balance Andrew. trends, card Card in segment a begin decline and improved an credit largely Side of our are losses

in our results quarter momentum building reflect card domestic Second business.

consumers volume of from modest acceleration a Domestic from was strong second when the contribute purchase As which and rates resulting is quarter growth volume historically spending continues saw quarter of strong partially quarter from spending first we from continuing the continuing T&E up the X% growth to XX% more through up end for an of of XXXX, Purchase or X% the June, up growth to the accelerated year-over-year XX% T&E high versus to quarter to second were purchase and emerge results. impact quarter, loan card billion the balances we about the XXXX. are payment quarter. year-over-year. balances. up in decline compared are offset elevated the of catch overall second of second rates High payments. volume XX% XXXX. and pandemic, more credit XXXX. to June down spending In Accelerating the purchase to make At was strikingly card was domestic volume in a $X.X revenue payment loan

points a to year-over-year. quarter moved large improved Excluding by of for ahead The swung growth build loans XXX quarter a strikingly release the the We year, improvement second Credit year-over-year. billion this sequential X% about loans domestic sale about ending for remains last card allowance second last the of typical XX-plus credit quarter-end were Provision point the a declined basis ending impact up year. strong. X%. to rate was of X.XX%, charge-off held year. for seasonal X.XX%, rate partnership than performance Compared X% quarter, a prior XXX in The $X.X to large year about losses quarter better delinquency at allowance from basis year-over-year. was the a portfolio

strong the drivers and basis domestic $XXX revenue quarter, second company outpacing million growth higher to Revenue margin card key of than our up typical million which to revenue the Purchase compared of up $XXX over to expense points basis XXX seasonal turn marketing margin, XXXX. credit quarter-over-quarter, loan me Let the XX.X%. in was points XX were volume margin. quarter pattern. Total year-over-year increased was growth card domestic

of marketing company Our choices in trends. card marketing are biggest driver total the

As the originations we we're strong from emerge purchase and volumes. seeing pandemic,

Our technology growth opportunities enhanced by transformation. are our

increased loans relationship which for business continues surge banking drive strategy to growth XX% increased also domestic to consumer a the leaning deliver in auto linked on auto high the prices second in keeping the our consumer are drove XX%. main watchful second business. business. Slide Pent-up context our Auto time, competitive up into eye auto of growth auto, the year-over-year our XX and deep quarter and our originations We auto growth demand growth, build Pulling banking Auto continued business. quarter second quarter a and exceptional themes results. second future by growth drive intensifying. the year-over-year further quarter. XX% capabilities marketplace. digital to across our same to we're grew dealer and XX% Driven in strong continue up, is marketing franchise. and banking Average At the quarter card build environment In industry consumer loans summarizes were in are from the momentum. up the ending credit significant results value and

from Average bank in the were Banking deposits or revenue loans $X.X by quarter, driven year-over-year. X% Second growth quarter prior-year in ending auto Consumer XX% were billion year-over-year. and up X% increased up consumer deposits. the retail deposits

increase by improved rate billion charge-offs normal driven quarter, points prices year-over-year tax from provision for in X.XX%, refunds in an essentially rate to auto XXX in this our and year. flat improved quarter used at benefit are elevated auction the losses of amplifying negative Second strong. business our basis car business. quarter drove the see proceeds seasonal results release time we credit auto the $X.X second lower X.XX%. around allowance charge-off the Year-over-year, the delinquency and an In Credit strikingly was by

a As normalize, to used auto they rate. will the vehicle headwind become prices charge-off

the quarter increase unusually We charge-off the auto from rate low level. second to expect

XX, discuss Slide Moving business. our I'll to Commercial Banking

held-for-sale. of billion to elevated Average liquidity. down loans from ending Quarterly be $X.X linked to down year-over-year. government and deposits to of loan were and customers commercial average Commercial down estate middle X%. loans X% real market of we balances year-over-year second Second and continues utilization from were the XXXX line quarter quarter as XX% X% hold the increased quarter continued levels moved

from decline offset by to is down the quarter X% estate was equivalent an with year one-time to Second is gain the associated more than in category one-time the by revenue quarter loans linked-quarter other held-for-sale. the linked a neutral therefore X% This commercial cost up from The moving company. driven real the was and quarter. and prior entirely decline

rate net increased and criticized annualized the swing quarter was negative linked build for allowance recoveries. charge-off improved the Excluding net driven X.X% revenue a The release, have and X% second effect, losses from criticized rate from basis XX% this an from about the Banking to to loan of XX Banking by quarter. to credit was Commercial swing was and The second XXXX, year-over-year compared the performing In would an significantly loan rate Provision quarter. points. allowance X.X%. nonperforming a charge-offs Commercial

capabilities. Credit second are our loans capital our continuing to we're business Banking in to themes results. with rebounding, on evident as our we strikingly propel strong, results, invest tonight to remains results our and are commercial to and and shareholders. Commercial continue delivering are we build strategic our quarter is future positioning. purchase volume some Our thoughts performance close our key solid Several I'll returning

near-term build card seeing to increasing opportunities domestic from are the pandemic. as We business we our emerge

We marketing further are these leaning to into seize opportunities.

Auto, for National brand. We increasing marketing are our our and Banking, also

technology of are in tech of ninth the the modern now up. journey bottom from to the a We year build stack company a

issue. short tech stakes rising. nothing progress investments increasing FinTechs escalate, is is the an of are and accelerating existential for to are seen including and technology flowing Competitor breathtaking Our into talent as of increasingly continues investment tech levels the as The compensation. war is

traction. the and opportunities invest transformation our technology as We that in continue emerge to gains

current now, our answer powering is be performance happy accelerating technology and digital questions. your modern setting in we'll capitalize And Our to the Jeff? to us revolution on banking. up

now Q&A Rich. session. the start We'll Thanks,

investors other single question, please may who to courtesy to question, a one ask plus a a limit As wish analysts and to yourself follow-up.

questions If the you relations be session, call. the have start please after team Holly, Q&A investor will available follow-up Q&A. the the after

[Operator John from Our you Instructions] question Pancari ISI. with will first Evercore so much. Thank Absolutely. come today

Did evening. growth quarter? Thanks. if Good your that assumption And can to timing get that in peak the inflection? of timing then rates. I the the a and you does payment card receivables you see if about for the talk your impact Want front? not, separately, thoughts can on if see how And on

customer while And And down, programs our you and remain You rates sheets know, card as has healthy extremely government been know, in John, have payment payment rates amplifying high historically winding balance at elevated. rates. levels. stimulus been are business, these payment remain

rates in You not at levels metrics. payment perfect QX our rates historically trust strikingly growth are a generation. rate while and muting drives strong high course, which even credit as high reported And can these reflection high side see total strong payment strong. is capital the rates And is trends payment the profitability of of very our spend portfolio, flip and of payment performance, remain balance

actually it's consumer. customers we levels indicative the high our correlate that happy are high-payment to in when So, we paying of and credit healthy strong continue results rates really And a are see. with those always

of the the John, rates. certainly at trend payment be can a if if that bit plausible easing don't I to little consumers see, me that a know of to would -- are we We would be numbers, more and back that little indicate. and out, move look and and we now a It's toward very monthly a that ease little rates would bit. normal, payment a thing it metrics would returning more hopefully going here step also spend natural they're bit up normalizing credit would be as to

I earliest a John, would quite still I of So indications seen It's that. guess, of level. really the say, running at we've breathtaking

please? question, Next

will from with question Credit Moshe Our come Orenbuch next Suisse.

comments excess opportunities as could and Great. opportunities amount about of little near-term seeing Thanks. talk or about inorganic build then the whether you're made primarily a the comment of the the release looking franchise, together about bit capital Rich, in well? putting increasing you significant you ones organic at to kind your

our mean, the And where leaning us everything economic the to because that the come has in created are and and that from you as -- strategy We been journey the insights. track really a founding days, national Moshe, for what of as put cohort, in many, an banking. and I -- sort our and into well installed call there that's that's had in and we growth. measure Bank every know a we company of you've lifetime been and here And afterward basis National we horizontal acquisitions list. but having great through we driven beginning some before during on in top wired growth going. built see We acquisitions. really accounting following many and so, action at it example. every organic We've is organically great I it's always every how bank organic while

being partner we've doing are times built that and or -- rolling with a organic spectrum to I one next on focus some a acquisitions. Snowflake and is to where an growth then is tech with there -- on putting is, and very looking And on in are at really, them any the not see respect being on So we're then a of And and opportunities, innovations strategic opportunities stand and right respect of investor some the that shoulders technology and bank now you at partly we FinTechs that On with example out. notch acquisitions. is saw we're acquisitions. these acquisitions, on there continuum function good a the of technology is in a companies are side it energy minutes which continuum them. partner as ago, the for with the few and market the the said we much technology in What fact, just end

those some we of continuum in generally tech of have these I'm acquisitions very, at the All the the very things look outperforming. back active When we're of we've struck are example on FinTechs little few of pleased traction that over and we by been places ways, the years, those and are success the with -- and having. in last and many for companies, all performance

the benefits that is modern so we companies a tech or big have FinTechs the have of we're tech do One that we stack that buying.

and the the contractual then favor. and really attract past -- something is ability so, sort to the the retain integration And think in the that leans the our talent period compatibility, I of

big respect of the There positives valuations. tech in that's So, the to of lots is on elephant kind there. with one room side the acquisitions and

recently price. a love we've gone several conversations but said, the So, not few and that company of at these to --

we is usually the our the but at kind don't I for are our about open think about think acquisitions and and business fill strategy it's strategically, right and an of very aperture little will where talk you this be necessarily organic-first So, price, very aware One -- pricing if FinTechs opportunities. I I Capital accelerate ones, tech out but companies think help of the moment,

Next question, please?

Absolutely.

Kevin Next, with we'll Barker Piper Sandler. hear from

levels -- XXXX we -- credit to in into pre-pandemic do Thank as into we XXXX? XXXX, during first normalized expect you. the run maybe the Considering go below saw you eventually and

Kevin. there, a seen level that ways to From an are was I that. normalize. in now, modern I hearing to [indiscernible] were what at never a has we is go extraordinary been before got It's -- I little times. virtually but think where I -- which felt we echoey saying right think benign it But you Kevin, heard we

not fact, but days. drivers. are the think a to to we in prediction it's make hard to these we because it, choosing want where I be is on is about about What We a talk predict that because coy to thing like

average. able place very drivers, accumulated you consumer sort about the consumer and what's average stimulus talking But be monthly there's even something from is a a have can [ph], really the -- what experience ease for I'm when because is the on average is, that is strong build government beneficial from right go benefits for mentioned in that think here at So, accumulated this what so that -- credit when look we earlier, consumers and of to surplus will the I way up there the normalizing. credit individual the bit in be consumers. I the is for one consumer this the different an of The think been performance of describing and And I is now. way only there that striking balance to

think be And mentioned I earlier, and gradually payment timing consumers' a linked thing to speculative. to which natural with that to payment for The it pretty inevitable, normalize. choices it the directions on head to a is it's think decline I rates. the starts of bit start and I are is at rates normalizes as I gradually a going think rate for credit

on of be markets credit markets for the during of cognizant take let's also time here, -- and the is lookout is natural work the period place opportunity work that advantage of of the how some view is in be the but Our particular how consumer overheating. indicators market this let's of

Next question, please?

you. Thank

hear from Shane Next, with we'll JPMorgan. Rick

has could thinking curious We're and reflect and afternoon. of my we're Hey, context how them the like curious outlook for couple times. day rates?, your I'm one up rates basis the initiatives taking at on change reserve on if question think in potential I'm terms as what in topic allowance about that policy and day of levels. now particular, one everybody. -- you this looking during come loss Thanks this a in seen return coverage Look, long-term reserve you of a long-term of the the we look we've crisis normal? to some

is This take I'll Andrew. Rick. that. Thanks,

a allowance, the would at look which and large to we're of going quarter we every other assumptions policy take as think into and number variables take certainly account factors. I

And of then. back upon we reflect a so, adoption, I have as the since things had lot on changed ratio that

each needs so, the And is then classes mix and of will asset the within asset our mix single things. those overall you to impact coverage going impact balance every at look class, sheet across

So, we're of that that all But pre-pandemic think and is you factors a at I still the believe the and all I of into economic those formula, think the look put asset mix, don't the all necessarily ratios ratio account the you at adoption broad But the I in of destination. that coverage the ratio also still at like assumptions I if coverage like. rough and including again, into benchmark mentioned. assumptions, look all what a can will take serve looking policy might successive economic very mix of as quarter it terms things of of as each that

Next question, please?

Thank you.

Next, Graseck Betsy we'll Stanley. with hear from Morgan

Hi. afternoon. Good

Betsy. Hey,

Just how the thinking you're to a growth. opportunity question that invest about on here account for

then sense indicated it those I account don't that, much it's more you year Thanks. unusual? up, to numbers in usually front the set benefit that but to is up of the opportunity marketing the the up us have think give half understand much you? that to how you the a helpful today? you dollars for is ramp You given is would back generating maybe more marketing of opportunity set know here And growth how the be give in the as

in kind the we don't they quite those growth account that specific numbers. right seen. numbers, they're strong obviously, numbers. origination not really tend of strongest ever yeah, strong we weakness out there have we're They're give because that was the pleased now. a year But to And the some ago Betsy, are

seen have the good a very about performance. feel originations. account We solid we really So,

and the enhanced also And transformation. especially now side the that us but And that's very and -- to banking. We're on that give is time in you are of by gone to national just we these the our the of are for future side. in the course technology going as underlying into said, have the we've marketing drive build steadily continue National leaning franchise. also opportunities just business, TV, of And has first to going. what we market because the now So, this marketing may opportunities how right are partly with quarter further on growth to into investing you've card TV seen have auto seen look partly happy

are customer we advertising some some the at is these experiences Capital in exceptional that we've of built. So, that debuting the traction that the the of business. innovations origination One, technology have And of we're seeing good side

we into so, lean to continue marketing. And

Next question, please?

you. Thank

Wells Next, we'll hear Fargo. with from Don Fandetti

was a Hey, was amount curious spend mentioned the regulatory happen? large could landscape you going is hiring thought that whenever the if move. to public sort I then that FinTech, balance to advantage that just One cloud talk And something out Rich. or I wondering you that's you if the of not report about saw was programmers a of I Capital of a take bit outlook. software tech

Don. Yes, you. Okay. Thank

is Winning me in talk really let in business one it to of the about the tech easiest And thing, thing ends world-class begins thing talk So, kind hiring. hiring talent. tech pull and technology to off with about hardest and today. the possibly tech and

the in know, profoundly principle exceeds while business. this true you for is true world-class vastly is demand tech -- is talent supply. the this because in principal technology as -- As any talent It

we're increasingly machine roles business cloud talent. these build into new that And software and essentially, right leaning what traction tech this of talent top But is other really data in we mentioned And hiring. to learning. been hiring is at talent. roles our eyes the they up years and with the consequence greatly so technology a US. also tech to again, the you up -- in we that do most and it, be technology of hard One is we've attracting roles most hiring of for we've But words it's have So, great real and -- is the way brand in we're the than strong competing built sought-after company heart in head-to-head this Most the just we've for the essentially, we're world the companies numbers a and of That year visibly is is upward one moving the natural going and demand ground more hiring are I I Don, to here. that banking The engineering supply. cost which technology the tech of in are flag the companies And get thing, front think investors. are exceeding journey just from want. success the been when that is. Capital living wanted a to and leading and and companies, technology it's the all it's does had something say if what for pull infrastructure, development, getting is that I that to of for the --

into leaning that. are We

associated FinTechs, can very these a tremendous there FinTech as such right we what it's was of in funding we cloud-based at innovative category don't their beacons regulatory think, modern and case, today, FinTechs, to I to have a business, them original amount that's is acquisitions I terms FinTechs and their for pay are in before innovations that of was and innovations with cases the I the to doing they venture FinTechs to these about front their in it into just I FinTechs comment capital But appropriately about have into in [ph] I Capital in these tremendous for we as maybe Don, talent. the a next a from is think going on approach FinTechs, asked -- technologies what side. can I you some me, and that, possibly think that entrepreneurial and of mean One position. And to we're marketplace is to we're what the disrupting benefiting FinTechs FinTechs Maybe opportunity funding study pursue. at that look because some stare but look good this. interest need are are that with going word. and the days, great think amount to venture carefully opportunities. out The double an very close And today at our FinTechs I banks some both that to I the look data the bringing have threats of of we close funding is we market. in at I example, partner and we of this as the there. going think these feel markets,

pretty regulation benefited is FinTechs than a lower level financial And from institutions electrifying. have. the this So of

Now, now, look regulated. say FinTechs one than are less and because I primary the they banks in more at right of is don't that areas, reason success think, the the sometimes FinTechs they're succeeding are, can

think are we for about. succeeding that the talked they I factors

when capital over the field. disruptors, the elephant and playing envision the think be time you to they're what's I is levelness context, the and of large being room that in tremendous with relative growth these and FinTechs look to requirements, regulatory the it the regulatory an carrying, going

minute then the what that we FinTechs, to kind exists the indicative been FinTechs, technology me and And modern to a So, opportunity our cloud. Capital like focused But watchful based if take that. on on And off of a for a infrastructure about have we've of focus Fintechs seeing for the think look in eye when years. we the success is we're One, we certainly have banking. we at of them, re-imagine that's the in

have have most have. of they other I them. also mentioned benefits We don't

banking scale, and a literally tremendous We underwriting and powerful have decades brand, experience. customer of

you, same some is The a I opportunities think look up, and we an takeaway of the in also we the windows sure of banking that all and accelerated the invest that Don. for when change, are at make the lean say of So, ways success FinTechs well-positioned is in but biggest the where it think during reasons. to But last industry Thank increasingly we the is need changing that and ways is some magnitude we of indicates of magnitude for in I on this because opportunity indicates we different to won't -- we and pull the invest, reasons, imperative that competition unbelievably and these an need for the that I basis. it forever. well-funded opportunity,

please? question, Next

Thank you.

from KBW. with hear we'll Next, Sanjay Sakhrani

transaction right I space follow-up of in account do in the growth from for growth subprime card segment assume about you're consumer, or in growth. growth what the lot seeing And had are volumes. the their today? if question guess think opportunity that correct? is that I could now super-prime on I maybe a talk the the the of US transactor coming a Thanks. about that I we guess, because just you how you Is Thanks. unfolding? behaviors see And

I dramatic think it. sense subprime The that in travel the we the the feel we've of of had business mass-market we you are underlying and the have Sanjay, franchise. America. the business continued take to bursting into of spenders. entertainment that And years carefully is of conditions strategy biggest they that's leaning lines been the we that's biggest world just return the the when -- that heavy general, for -- run pent the raising And that things on the what's terms newsworthy the in numbers not -- spend prime leaning thing in feel the been and that surge And just in. the and the at the certainly, happening the of as and in just can But we super-prime is of then And pullbacks a opportunity characteristic sort side, by growing business short inside in opportunities, has the and look up nor in is sort are same in lot out. originations at news dramatic a powered terms right think to more warrant. subprime I we've see as really, our

the that. our into customers and our in gradually right all the market's holding the we things tightening a of a So, are And It's to we're across moment. of good we the credit on more side credit of credit results, in business Sanjay, watchful lines really, up will because of position, on work. the course good are unleashing sort a that's change up credit is but place. side now, and naturally originations you about talked opening pretty opening up lines we we consumer see -- on good of And we sort continue like remember, because our at years back lean the key than eye opening with not net-net are indicators lines that the

Next question, please?

Thank Sachs. you. And with our next question comes Goldman from Ryan Nash

everyone. evening, Good Hey.

Hey, Ryan.

making, outside year-over-year on in, of come investments? in assess be should you point, what reinstate saw first with need what we improved think XX% line investments just growth I the timeline ready see on It to So, times how I And quarters. the Rich, do it that should Should efficiency looking for you're into return guess, that? from Rich, improving. time combined seems improvement in we do or the at accelerating marketing. Thanks. you you top these the the This or efficiency point a you're reintroduce target be technology the form leaning you'll that for obviously several mentioned efficiency? the several for to to we the like guess

first Well, Thanks. word Okay. marketing. on a

know, to I marketing we driven, it, and what sort the as leaning leaning is right you so Betsy, are said always windows into because further Ryan. little a As now do into we of

where that's are the side. marketing so in And we

is you goes on the on upside. spending So, at pretty efficiency high of but from marketing an the view, of goes - That marketing down, point marketing. moment more been that notice levels up,

been in to of Most just the to to now, if where good feel conversations competitors downturn is one loosening relevant can happening, data - extrapolate exacerbated have the then at could good model the turn if I credit and these credit growth historically But turn credit to our building leaning what kind credit this competition the too numbers, we relies this not as into it me in it and to more up want the and now that's these is time And that in may The timing about it say question. data of call us, - the irrational. of see about efficiency the performance and competition right about, going you're embolden the intensely, credit more be to very are aggressive on trends predicting the industry things decision-making. looking could year shape. with and be the be lenders is the their to is could be longer market always the two, persists, that what on to things offers, will in tells one across next for the and for by right last the a that is particular time. down. especially these mirror standards. that this But consumer respect this great this frankly to we enough consumer do see environment, Because a this Typically, Ryan, growth going physics is earnings to in And that. reach it's make them you back I Ryan, unique or some we worry over Let of modeling on most. with more encourage you're opportunities particular because you rewards. you inform of the benign underwriting rearview not And mail and pivot of And see sort seen at thing it it's very - I their can just point. and rewards right now, pretty see they of the what moment see we count media flashpoints that all in to calls moment. I've intense you competition heating is that things competition see But want are around you I the the the activity, these I up marketing kind competitive to on direct see offerings and heating the reflect the where cycles. take they the to but yet much likely

and So liquidity of system, revving the - capital and really the you've earnings as I FinTechs is and about up got a then in lot the earlier. talked also there are and that

right as So are being ourselves in the coming planted now. every credit leaning day opportunity, even up the opposed the that in the these cycle, the as seeds to there next this challenges we're for economic cycle the into cycle - - seeds credit remind we

is, never And then we way [indiscernible] so, just we just we the our these surprised. up happen at indicators basically do of to very inevitable be and to and we a eye only to for will want things not act what make watchful likely, decisions don't have key look we models accordingly,

And our on tight XXX delivered particularly revenue the points the And XXXX, focused of progress, about pandemic management. we ratio and to efficiency XXXX combination revenue Let with me turn on for of improving to talk operating operating growth. We've efficiency. been growth years. course, our improvement of expense from basis interrupted

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focus operating continue we to on efficiency. meanwhile, So,

the both revenue Our tech gains, growth productivity and gains. digital of is through engine transformation efficiency long-term

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Next question, please?

Absolutely.

Research. Bill Next, Wolfe we'll hear from Carcache with

growth and we see ahead? of loan actually to expect think would as revolve normalization look Rich, provide rates we spending such to about an process rates you. growth described, could you as that incremental that outpace you of the you Thank loan that growth payment tailwind

will but can I payment rates. in is side investment it's I I've between with over -- will as I as we whole Because paid lesson it's think mathematically But and of route is, time, the about here credit performance. natural along time very we've the sort think that growth will that honestly that things all has be much payment even in very growth on rates well, And sometimes community the said important there an that which but for that of happen equal, with learned this loan the well and about as payment about wasn't think things a industry credit an a occasional through it street. is more important been it's rates other the and paid profound loan the banking talked gone has the really turn healthier me here. collectively And the industry think metric And relationship and higher and and of mean, is of to really to only payment credit get striking a not empirical talked -- And the fact, which I reinforces rates. conversation that one I and think being that growth. likely from payment thing lowering both consumer come rates is time banking of normalization on you see the thing boost very intuitive of sort we the likely here. you, to of something impact relationship, reflects to I kind it really

monthly is the growth baking gradual -- really of in the of I a very think what lowering sort a that that's enough growth relative oven significantly a of So, and like of loan there. move but normalization to baking us seeing to to payment the metrics. I not But for a various indicators when same is think quite originations won't, the early credit, spending reason And rate that, basis, you -- topping that things the I'm things correspondingly or essentially for run are is numbers probably say some phenomenon. of early growth on what will -- of growth and to lead the to saying fact, wouldn't do loan counting but on we the have get for tables metrics in like journey of those the other very the bank got a lead it I to rates.

Next question, please?

you. Thank Napoli Bob Blair. And William with from our final comes today question

of how cetera. wealth price that Paribus, now at online about what and management going you looking and buy payments, you get around you're later, thoughts I good more color comments was But on FinTech I Thank tracking. management, it's it's business pay a know, bought buying, into et a Rich, areas. appreciate of been there's business investment, BXB partnering, FinTech? the of very you -- since charge spend few just and lot little areas as bit hoping maybe your to of a a and afternoon. years But all talk there whether spend it's group is, -- management, card broad your kind

just where you partnerships what areas to wondered I most we So are acquisitions? attractive would see or

say of do for go areas are three priority Bob, example. what what than areas for But you and let's is we look do bunch is mentioned we our areas, a interesting rather FinTech. -- and these

really, We have areas we're our tech the benefits of businesses a is is across see that on one transformation the in. of the of a lot we of portfolio years -- -- opportunities and in one this of

study with marketplace buy. can do that we And so, the massively also we into. FinTech that see all are learn or priority, partner leaning a can What say we here is we three rather Frankly, lot. it areas beyond we are let's study go than the we these across what the because

effort. is alone learning sheer the is, do we what then and -- So worth the

the and need, business good company of model buying that from bunch on see it let's that. we can they're that along we but at relative go We than -- us. partnering, rather also telescope investing, to really what but what we thought And is we continuum what look, a for or but or find to be in way. One, talent of culture so, look with the look a especially, look to find the and if end across do -- from this They us idea. bad and And wow, of to what and the other things, we that we these say, that. accelerative look Capital -- would we say the really do what we we learn times, school We try did the

the hard in at then really end, is made has a has acquisitions And really And executives comes, -- stays, buy most business we in talent the in an lot focus talent, what been than we on the successful do ask but rather We could becomes so, we because a there particular that every that and leading the company. our once model. leads build of it. while and look acquisition that always ourselves,

don't a how it having lot, you. we works. but we that's Thank And out so, anything a times, of buy Bob. always come learned And lot

any everybody Capital just night. call your continuing further Investor joining if team us on for questions. for Thank a have you conference available Thanks, Have interest a will great you minutes Relations in the Remember, today. be few Well. One. in

And thank for again, you participating. gentlemen, ladies and

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