[R]8:00AM New York—Capital One Financial Corporations shares fall, as company lowers fourth quarter earnings forecast.[/R]

Capital One Financial Corporation has cut fourth quarter 2007 earnings forecasts to nearly 60 cents per share on bulging legal costs and losses related to the problems in the U.S credit markets. The company earned $1.14 per share fourth quarter 2006.

For fiscal 2007, Capital One, the biggest U.S. card provider, now targets per share earnings of $3.97, down 20% from earlier earnings predictions of $5 per share.

The decline was caused by about $1.9 billion of loan-loss provisions, inclusive of $1.3 billion Capital One said it expects to write off, as uncollectable. The company also took a charge of $60 million in legal reserves in the fourth quarter.

Shares of Capital One fell 92 cents or 2.14% to $42.92 in after hours trading Thursday, falling from a 52 week high of $83.84. Analysts surveyed by Thomson Financial are targeting a one-year price of $65.54.

Investor confidence was shaken over the news Thursday, amid concern the U.S financial chaos is far from over. Consumers have cut expenditure due to higher energy costs, as well as rising unemployment.

Analysts now expect most major financial institutions to report weaker profits or losses in the current reporting season, as a result.

Capital One said it expected earnings from continuing operations of 85 cents per share in the quarter and $6.55 per share at full-year. The figures exclude the 25 cents per share quarterly loss related to the closure of GreenPoint Mortgage in August 2007. For 2007, the loss stood at $2.58 per share.

The company said it now expects charge-offs of about $5.9 billion in 2008 amid expectations the U.S. economy will be weaker. In November, Capital had estimated the figure at between $4.9 billion and $5.5 billion.

Capital One expects to end fiscal 2007 with a positive cash balance of $29 billion while it has also initiated a legal reserve of approximately $60 million for estimated possible damages in connection with pending Visa litigation.

The company is also adding about $650 million to its charge-off allowance because of recent delinquencies in its consumer lending businesses and ""continued deterioration"" of approximately $700 million of home equity lines of credit originated by its GreenPoint Mortgage division.

Capital One said it ""believes that it remains well-positioned with respect to funding as a result of its more robust access to deposits, reduced reliance on wholesale funding markets, and strategy of holding significant liquidity.""