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Discover Financial Results Helped by Credit Loss Provision Drop

Credit card company tops analyst first-quarter estimates as credit delinquencies fall.
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Discover Financial Services  (DFS) - Get Discover Financial Services Report topped first-quarter analyst estimates Wednesday, posting net income of $1.6 billion, or $5.04 a share, on revenue of $2.8 billion helped by a drop in provisions for credit losses.

In the same period a year ago, the company posted a loss of 25 cents a share on sales of $2.9 billion. It reported a loss of $61 million.

Discover had been expected to report adjusted net income of $851.5 million, or $2.83 a share, on sales of $2.8 billion, based on a FactSet survey of 20 analysts.

The company said its provision for credit losses decreased $2.2 billion during the period. It said the 30-day delinquency rate for credit card loans was 1.85%, down 77 basis points from the same period a year ago.

"Our first quarter results were characterized by sustained strong credit performance, robust sales growth, and solid execution on operating and funding costs," said Roger Hochschild, CEO and president of Discover, in a statement. "As the economy recovers, we believe the actions we took through the pandemic to protect our employees, aid our customers, and invest in our franchise create a compelling position for Discover in 2021 and beyond."

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The stock has fallen 3.1% since the company last reported earnings on Jan. 20.

For the year, analysts project revenue of $11.5 billion.

Shares of Discover rose $2.60, or 2.64%, to $101 in after-hours action. The stock gained 1.65% in the regular session. 

Discover is among a number of credit card issuers that have been offering programs to assist people hit by the pandemic shutdowns. 

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This story has been updated to correct the year-ago loss figure.