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Cap One Reserves $200 Million for Bad Loans

Capital One Financial Corp , the credit card and banking giant, announced Tuesday that it expected to add $200 million this quarter to its reserves for bad loans. The reserve increase reflects "continuing weakness in the U.S. economy, as observed in recent trends in economic indicators, including home prices and the unemployment rate."

The company expects the rate of U.S. card charge-offs to be in the low-6 percent range in the third quarter, and to rise to about 7 percent in the fourth quarter. It was 6.26 percent in the April-to-June period, according to Capital One's latest quarterly report.

For 2008, Capital One expects a low single-digit percentage decline in managed loans, and double-digit growth in deposits. It also projects low- to mid-single-digit revenue growth, and a decline of at least $200 million in operating expenses. More .