This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Discover Financial Services Reports Second Quarter Net Income Of $602 Million Or $1.20 Per Diluted Share

Net interest margin was 9.44%, up 16 basis points from the prior year. The increase in net interest margin from the prior year reflects decreased funding costs partially offset by lower loan yield. Credit card yield was 11.97%, a decrease of 24 basis points from the prior year. The decline in credit card yield from the prior year reflects an increase in promotional rate balances and a decline in higher rate balances, partially offset by lower interest charge-offs. Interest expense as a percent of total loans decreased 39 basis points from the prior year as the company continued to take advantage of available low rate funding.

Net interest income increased $116 million, or 9%, from the prior year, benefiting from loan growth and lower interest expense, which was partially offset by a decline in loan yield.

Other income increased $66 million, or 14%, from the prior year primarily due to revenue from Discover Home Loans and higher net interchange revenue as a result of increased sales.

The delinquency rate for credit card loans over 30 days past due was 1.58%, an improvement of 27 basis points from the prior year, and a decrease of 19 basis points from the prior quarter. Credit card net charge-off rate for the second quarter was 2.34%, down 38 basis points from the prior year, and down 2 basis points from the prior quarter. The student loan net charge-off rate excluding PCI loans was 1.58%, up 85 basis points from the prior year and 76 basis points sequentially, due to a larger portion of the portfolio entering repayment and seasonality, respectively. Personal loan net charge-off rate decreased 1 basis point from the prior year and 6 basis points sequentially to 2.24%.

Provision for loan losses of $225 million decreased $37 million from the prior year, driven by a decline in charge-offs and a higher reserve release. The reserve release for the second quarter of 2013 was $93 million reflecting the impact of a 21 basis point decline in the reserve rate from the prior quarter partially offset by additional reserves due to loan growth. The second quarter of 2012 included a reserve release of $73 million. Net principal charge-offs were $17 million lower than the prior year as a result of the continued decline in delinquencies and bankruptcies.

2 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs