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Discover Beats on Credit Card Spending Surge

Discover Financial Services beat the Street in second quarter earnings with a better than expected level of consumer credit card spending.



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are up more than 3% on a losing morning for financial stocks, after reporting a second quarter profit increase of 14% on Thursday.

Discover earned 33 cents a share in the second quarter on net income of $258 million, versus a Street estimate of 11 cents earnings.

A credit card spending increase, coupled with a decline in credit card write-offs, spurred the improved performance from Discover Financial.

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Card sales volume increased 6% -- to a record $23 billion for a second quarter -- while write-offs fell to just under 8% in the second quarter. The write-offs came in slightly below the Discover Financial guidance of 8% to 8.5% for the second quarter. The credit card company expects the write-off rate to remain between 7.5% and 8% in the third quarter.

"We anticipate that sustained improvements in credit performance will continue to contribute meaningfully to earnings," Discover Financial CFO David Nelms said in the earnings statement.

-Reported by Eric Rosenbaum in New York.

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