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Discover Financial Services Reports First Quarter Net Income Of $631 Million Or $1.31 Per Diluted Share

Discover Financial Services (NYSE: DFS) today reported net income of $631 million or $1.31 per diluted share for the first quarter of 2014, as compared to $673 million or $1.33 per diluted share for the first quarter of 2013. The company's return on equity for the first quarter of 2014 was 23%.

First Quarter Highlights

  • Revenue net of interest expense was up $86 million, or 4%, from the prior year to $2.1 billion.
  • Total loans grew $3.5 billion, or 6%, from the prior year to $63.9 billion.
  • Credit card loans grew $2.2 billion, or 5%, to $50.9 billion and Discover card sales volume increased 3% from the prior year.
  • Net charge-off rate for credit card loans decreased 4 basis points from the prior year to 2.32% and the delinquency rate for loans over 30 days past due decreased 5 basis points to 1.72%.
  • Payment Services pretax income was down $19 million from the prior year to $28 million. Transaction dollar volume for the segment was $50.8 billion, up 4% from the prior year.

"Our results this quarter reflect a solid start for 2014 as we delivered strong card loan growth that was near the top of our targeted range while maintaining excellent credit performance and continuing to grow other lending products as well,” said David Nelms, chairman and CEO of Discover. “Additionally, we are increasing our return of capital to shareholders through the recently announced dividend actions and the continuation of share buybacks following our inaugural CCAR stress test.”

Segment Results:

Direct Banking

Direct Banking pretax income of $994 million in the quarter was down $39 million, or 4%, from the prior year.

Total loans ended the quarter at $63.8 billion, up 6% compared to the prior year. Credit card loans ended the quarter at $50.9 billion, up 5% from the prior year. Personal loans increased $915 million, or 27%, from the prior year and private student loans increased $385 million, or 5%, from the prior year. Excluding purchased student loans, private student loans grew $900 million, or 26%, from the prior year.

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