After having written down the value of its auto finance business, along with setting aside additional amounts to cover bad loans, Capital One Financial Corp posted a $1.4 billion, or $3.74 per diluted share, net loss in the fourth quarter - a dramatic plunge with regard to the year-earlier figures of $226.6 million net income, or 60 cents per diluted share!

The McLean, Virginia-based bank and credit-card issuer, took an $811 million noncash impairment charge, linked to its troubled auto finance business, in addition to setting aside a whopping $2.1 billion to cover bad loans. Moreover, it also kept back another $1.0 billion for greater loan losses, foreseeing a greater descent of its credit portfolio, which is beleaguered due to increase in unemployment.

Capital One's net chargeoffs - that is, loans the company feels will not be repaid - jumped to $1.05 billion from the 2007 fourth-quarter figures of $650 million. The rate of chargeoffs increased almost two times - from 2.66 percent to 4.21 percent.

The largest issuers of MasterCard Inc and Visa Inc credit cards, whose shares dropped 7.7 percent in post-market trading, predicts higher credit losses in 2009, because of which the Rating agency Standard & Poor has cut this year outlook of Capital One to negative.

The Chairman and CEO of Capital One, Richard Fairbank, said: "The economic downturn was the key driver of our fourth quarter ... and we expect that the recession will continue to impact our results throughout 2009."