Discover lower by 1%; sees higher charge-offs this year

• Q4 net income of $563M or $1.40 per share vs. $500M and $1.14 a year ago.
• Direct Banking pretax income of $868M up $101M for the year. Total loans up 7% Y/Y to $77.3B; card loans up 6% to $61.5B. Net interest income of $160M up 9%. NIM of 10.07% up 32 bps. Net charge-off rate excluding PCI loans up 28 bps Y/Y to 2.39%, with total delinquency up 30 bps to 1.97%. Provisions of $579M up $93M thanks to those higher charge-offs. Expenses down $41M, or 5% thanks to lower professional fees.
• Payment Services pretax income of $15M vs. $21M a year ago, with payment services transaction volume flat at $46.1B.
• 7.7M shares bought back during quarter for $477M (cutting float by 2%).
• The conference call is underway, and the company expects modestly higher NCOs this year, and payments volume to return to single-digit growth. Presentation slides here.
• Previously: Discover Financial Services beats by $0.02, beats on revenue (Jan. 24)
• DFS -1% after hours