Discover Financial 1Q net income rises 2 pct
- Associated Press
- April 23, 2013 - 6:32 PM
RIVERWOODS, Ill. - More loans and higher interest income helped lift Discover Financial Services' first-quarter profit by 2 percent. The credit-card company got another boost from more customers paying their loans on time: delinquent loans sank to an all-time low.
Discover said Tuesday that its profit after paying preferred dividends rose to $659 million, or $1.33 per share, for the three months ended March 31. That was up from $644 million, or $1.21 per share, in the same quarter last year.
Analysts, on average, expected $1.14 per share, according to FactSet.
The company's shares touched an all-time high of $45.61 in early trading. The stock closed at $44.33 Tuesday, up 72 cents, or 1.7 percent.
Revenue net of interest expense increased 10 percent to $1.99 billion. The company credited growth of 10 percent in its student and personal loans, as well as revenue from the mortgage business it acquired from Tree.com Inc. last summer, along with falling funding costs.
Total loans increased 7 percent to $60.4 billion. Credit card loans increased 5 percent to $48.7 billion, while card sales volume increased 4 percent to $24.9 billion.
The rate of card and loan payments that were past due by 30 days or more fell to 1.77 percent. That's down from 2.1 percent in the first quarter of last year, and among the best in the industry. The company wrote off $287 million in uncollected card balances, down from $338 million last year.
Pre-tax income from the company's direct banking business rose 3 percent to $1 billion, while pre-tax income at its payment services business fell 2 percent to $47 million, as higher professional fees and marketing expenses offset higher revenue.
Sales at U.S. retailers, which account for the bulk of Discover's business, declined a seasonally adjusted 0.4 percent in March. That followed a 1 percent gain in February and a 0.1 percent decline in January.
Still, that didn't slow spending by holders of rival credit card issuers American Express and Capital One Financial.
Earlier this week, American Express said cardholder spending rose 6 percent in the first three months of the year, while Capital One noted annual increases in revenue in its domestic card business.
Riverwoods, Ill.-based Discover, best known for its namesake credit card, is the sixth-largest U.S. credit-card issuer.
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