real-time news and commentary for investors
Monday, Oct 21
Earnings miss good excuse for Discover investors to lighten up
- Direct banking pretax income of $918M off 6% from a year ago.
- Discover card sales volume of $28B up 3% Y/Y. Credit card loans of $50.4B up 4%. Total loans of $62.7B up 5%, with private student loans of $387M up 5%, personal loans of $830M up 26%.
- Net interest margin of 9.65% gains 26 basis points from a year ago thanks to lower funding costs offsetting lower loan yields. Net interest income of $122M up 9%.
- Delinquency rate for credit cards over 30 days pas due falls 16 bps to 1.67%, but is up 9 bps from Q2. Credit card net charge-offs of 2.05% is off 29 bps from a year ago and from Q2. Student loan charge-offs of 1.33% is up 50 bps from a year ago.
- Loan loss reserve build of $42M due to lower expected recoveries on aged charge-offs and loan growth. Last year's Q3 saw a provision release of $167M.
- Payment services income of $28M Is off $20M from a year ago.
- About 7M shares repurchased during Q for $350M, cutting the float by 1%.
- Conference call at 5 ET.
- Q3 results, press release.
- DFS -4.2% AH.