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Higher loss provisions take bite out of Discover earnings; shares down 2.8%

Jul. 26, 2017 4:37 PM ETDiscover Financial Services (DFS) StockDFSBy: Stephen Alpher, SA News Editor2 Comments
  • Q2 net income of $546M or $1.40 per share vs. $616M and $1.47 a year earlier. ROE for the quarter of 19%.
  • Total loans up 8% Y/Y to $78B; credit card loans up 8% to $61.8B; Discover card sales volume up 5%.
  • Total net charge-off rate excl. PCI loans up 52 basis points Y/Y to 2.79%; 30 days past due rate up 33 basis points to 1.93%.
  • Direct Banking pretax income of $831M down 4% Y/Y thanks to higher loan loss provisions. Offsetting was an 11% increase in net interest income - NIM of 10.11% up 16 basis points.
  • Payment Services pretax income of $36M up from $30M a year ago.
  • 7.2M shares bought back during quarter for $450M, cutting the float by 1.9%.
  • Conference call at 5 ET
  • Previously: Discover Financial Services misses by $0.05, beats on revenue (July 26)
  • DFS -2.8% after hours

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