Capital One Financial (NYSE:COF) fell Monday after saying in a filing that Walmart (NYSE:WMT) is moving to end its credit card partnership. Capital One said in a filing that Walmart is suing to end the agreement, while Capital One maintains that the retail giant does not have a right to end the agreement early.
The suit, filed last week in the Southern District of New York, alleges that Capital One didn't live up to certain terms of their pact. Specifically, the giant retailer accused the credit card issuer of falling short on its customer care practices, such as delivering replacement cards to customers within five days and promptly posting transaction and payment information to customers' accounts, according to media reports.
As of Dec. 31, 2022, the card program consisted of $8.3B in ending outstanding loan balances and the allowance for credit losses related to the card program portfolio was ~$314M. For 2022, the card program produced ~$214M in net income, Capital One said in a filing.
If the court allows Walmart to end the card program early, Capital One expects that resulting transfer of its card portfolio to a new issuer to occur no earlier than January 2025.
COF shares gained 28 cents to begin Monday and the week at $95.21.
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