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Discover Financial Services Reports Fourth Quarter Net Income Of $551 Million Or $1.07 Per Diluted Share

Discover Financial Services (NYSE: DFS) today reported net income of $551 million or $1.07 per diluted share for the fourth quarter of 2012, as compared to $513 million or $0.95 per share for the fourth quarter of 2011. The company’s return on equity was 23%.

Fourth Quarter Highlights

  • Total loans, credit card loans and Discover card sales volume all grew 6% from the prior year.
  • Credit card net charge-offs reached historic lows with a net charge-off rate of 2.29%. Credit card loan delinquencies over 30 days past due increased 5 basis points sequentially to 1.86%.
  • Payment Services pretax income was down 21% from the prior year to $33 million. Transaction volume for the segment was $49.0 billion in the quarter, an increase of 13% from the prior year.

“Our strategy and business model are working as we achieved organic growth in all of our lending products,” said David Nelms, chairman and CEO of Discover. “I am proud of our strong performance this year and our achievement of record net income, record volumes and a strong return on equity. In 2012, we established new partnerships in payments, diversified our direct banking product offerings and demonstrated our commitment to returning excess capital, which we are further emphasizing with a 40% increase in our dividend.”

Segment Results:

Direct Banking

Direct Banking pretax income of $827 million in the quarter was up $51 million, or 7%, from the prior year.

Discover card sales volume grew 6% from the prior year to $26.5 billion. Credit card loans ended the quarter at $49.6 billion, up 6%, from the prior year.

Total loans ended the quarter at $61.0 billion, up 6% compared to the prior year. Private student loans increased $426 million, or 6%, from the prior year and personal loans increased $624 million, or 24%, from the prior year.

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