CECL drains $2.9bn from Capital One’s CET1

Core capital ratio to fall 16 basis points following switch to new accounting standard

Adoption of the Current Expected Credit Loss (CECL) model for setting loan reserves will knock $2.9 billion off of Capital One’s regulatory equity capital over four years.

Allowances for credit losses increased 40% to $10.1 billion on January 1, when the switch to the new model took place. Allowances for consumer banking climbed the most percentage-wise, by 48% to $1.5 billion. Credit card allowances jumped 42% to $7.7 billion, and those for commercial loans 13% to $876 million.

Capital One

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