Discover Shares Up on 3Q Net Jump
RIVERWOOD, Ill. (
) --
Discover Financial Services
(DFS) - Get Report
shares were moving higher in the late morning following news that the credit card operation tripled its net income during the third quarter -- though most of the brighter outcome was fueled by a settlement payment and expense slashing.
On Thursday, Discover said in a press release that its bottom-line surged to $577.5 million, or $1.07 per share. At the same time last year, net income tracked at $180.1 million, or 37 cents per share.
But a $287 million settlement payment boosted the third quarter showing tied to Discover's antitrust suit against
Visa
(V) - Get Report
and
MasterCard
(MA) - Get Report
that ended last fall.
Shares were moving higher by 48 cents, or 3.1%, at $15.80.
Sales volume on Discover Cards dipped 7%, though expenses were also restrained by 14% while U.S. card income climbed to $913 million.
Still, recession pressures continued popping up during the quarter, though some figures improved sequentially. In managed-basis calculations, which account for securitized loans, net charge-offs were up to 8.39% in the third quarter from 5.20% in the year-earlier period. That helped boost the provision for loan losses by 23% from a year-ago to $924.4 million during the third quarter, though that's still lower than the $1.11 billion from the immediately preceding quarter.
Discover also said it expected net charge-offs to move higher in the fourth quarter, landing between 8.5% and 9%.
The company's 30-day delinquency rate, on a managed basis, went up to 5.10% from 3.85% a year earlier. The 90-day rate jumped to 2.60% from 1.88% last year, though that was better than the 2.73% rate clocked in during the second quarter.
-- Written by Sung Moss in New York
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