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Discover Financial Services Reports Second Quarter Net Income Of $644 Million Or $1.35 Per Diluted Share

Discover Financial Services (NYSE: DFS) today reported net income of $644 million or $1.35 per diluted share for the second quarter of 2014, as compared to $602 million or $1.20 per diluted share for the second quarter of 2013. The company's return on equity for the second quarter of 2014 was 23%.

Second Quarter Highlights

  • Revenue net of interest expense was up $131 million, or 6%, from the prior year to $2.2 billion.
  • Total loans grew $4.2 billion, or 7%, from the prior year to $65.9 billion.
  • Credit card loans grew $3.0 billion, or 6%, to $52.7 billion and Discover card sales volume increased 6% from the prior year.
  • Net charge-off rate for credit card loans decreased 1 basis point from the prior year to 2.33% and the delinquency rate for loans over 30 days past due increased 5 basis points to 1.63%.
  • Payment Services pretax income was $31 million. Transaction dollar volume for the segment was $50.9 billion, up 3% from the prior year.

"Our record earnings per share this quarter reflect outstanding fundamental performance in our Direct Banking segment in terms of loan growth and credit performance,” said David Nelms, chairman and CEO of Discover. "Our continued focus on gaining wallet share with existing customers and acquiring new accounts with Discover IT drove strong card receivables and sales growth of 6%."

Segment Results:

Direct Banking

Direct Banking pretax income of $984 million in the quarter was down $18 million, or 2%, from the prior year.

Total loans ended the quarter at $65.8 billion, up 7% compared to the prior year. Credit card loans ended the quarter at $52.7 billion, up 6% from the prior year. Personal loans increased $949 million, or 26%, from the prior year and private student loans increased $370 million, or 5%, from the prior year. Excluding purchased student loans, private student loans grew $889 million, or 26%, from the prior year.

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