“So this effect will diminish over the next few quarters, we would expect.”

In context

“aid about the consumer and some Capital One specific things as well. So in the Card business, we -- you know our delinquencies and charge-offs are consistent with normal seasonality now, and it's clear that our card credit has settled out. It's also clear that it settled out above pre-pandemic levels. And sort of there's three main reasons for this. First, we still have relatively lower recoveries compared to before the pandemic as a result of historically low charge-offs in the rearview mirror and therefore in our charge-off inventory. So our recovery rate per dollar of charge-offs has been stable, if anything, in fact a bit better than before the pandemic, but just the inventory remains below pre-pandemic levels. But it's rising, it's heading toward returning to the pre-pandemic levels. So this effect will diminish over the next few quarters, we would expect. Secondly, that we believe the cumulative effects of inflation and higher interest rates are creating affordability pressures for some consumers, particularly those whose incomes have not kept pace with inflation or have higher debt servicing burden. So we think that's a factor. And you know, to your point, I'm actually not making a point about the low end of the market, whether measured by income or credit score. Generally speaking, we've seen stronger relative income growth at the lower end of the distribution since 2020. And you know, customers with the highest debt servicing burdens tend to skew more prime than subprime. So -- and then, of course, the other factor, you know that we would point at as to why charge-offs are settling out above the pre-pandemic levels is the delayed charge”