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Discover Financial Services Reports Fourth Quarter Net Income Of $602 Million Or $1.23 Per Diluted Share

Discover Financial Services (NYSE: DFS) today reported net income of $602 million or $1.23 per diluted share for the fourth quarter of 2013, as compared to $539 million or $1.06 per diluted share for the fourth quarter of 2012. The company's return on equity for the fourth quarter of 2013 was 22%.

Fourth Quarter Highlights

  • Revenue net of interest expense was up $113 million, or 6%, from the prior year to $2.1 billion.
  • Total loans grew $3.2 billion, or 5%, from the prior year to $65.8 billion.
  • Credit card loans grew $2.0 billion, or 4%, to $53.1 billion and Discover card sales volume increased 3% from the prior year.
  • Net charge-off rate for credit card loans increased 4 basis points from the prior quarter to 2.09% and delinquencies over 30 days past due increased 5 basis points from the prior quarter to 1.72%.
  • Payment Services pretax income was down $6 million from the prior year to $26 million. Transaction dollar volume for the segment was $49.8 billion, down 1% from the prior year.

"The fourth quarter concluded a strong year for Discover, with record net income for 2013," said David Nelms, chairman and CEO of Discover. "Last year, we grew our card receivables faster than the industry and further established ourselves as a leading direct bank and payments company through expanded product offerings and new payments partnerships."

Segment Results:

Direct Banking

Direct Banking pretax income of $911 million in the quarter was up $100 million, or 12%, from the prior year.

Total loans ended the quarter at $65.7 billion, up 5% compared to the prior year. Credit card loans ended the quarter at $53.1 billion, up 4% from the prior year. Private student loans increased $374 million, or 5%, from the prior year and personal loans increased $895 million, or 27%, from the prior year.

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