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Discover Financial Services Reports Third Quarter Net Income Of $593 Million Or $1.20 Per Diluted Share

Discover Financial Services (NYSE: DFS) today reported net income of $593 million or $1.20 per diluted share for the third quarter of 2013, as compared to $637 million or $1.24 per diluted share for the third quarter of 2012. The third quarter of 2013 included a $42 million reserve build while the third quarter of 2012 included a $167 million reserve release. The company's return on equity for the third quarter of 2013 was 23%.

Third Quarter Highlights

  • Total loans grew $3.1 billion, or 5%, from the prior year to $62.7 billion.
  • Credit card loans grew $1.9 billion, or 4%, to $50.4 billion and Discover card sales volume increased 3% from the prior year.
  • Credit card net charge-offs reached historic lows with a net charge-off rate of 2.05%. Credit card loan delinquencies over 30 days past due increased 9 basis points from the prior quarter to 1.67%.
  • Payment Services pretax income was down $20 million from the prior year to $28 million.

"Discover's card loan growth continues to exceed industry growth while charge-offs achieved new record lows," said David Nelms, chairman and CEO of Discover. "During the quarter we launched Discover Home Equity Loans as we continue to expand our direct banking product suite to more broadly serve consumer needs."

Segment Results:

Direct Banking

Direct Banking pretax income of $918 million in the quarter was down $62 million, or 6%, from the prior year.

Discover card sales volume grew 3% from the prior year to $28.0 billion. Credit card loans ended the quarter at $50.4 billion, up 4% from the prior year.

Total loans ended the quarter at $62.7 billion, up 5% compared to the prior year. Private student loans increased $387 million, or 5%, from the prior year and personal loans increased $830 million, or 26%, from the prior year.

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