Discover Financial Services (DFS) reported a strong 14% rise in second-quarter net income to $258 million, or 33 cents per diluted share, driven by stronger credit performance and card sales. Net income for the second quarter of last year was $226 million, which included approximately $295 million related to the Visa/ MasterCard antitrust litigation settlement, the company said in a statement.
Discover card-sales volume rose 6% to $23 billion from the year before. Discover reported that net charge-offs dropped $81 million, and delinquencies of over 30 days fell $266 million from the prior quarter. This helped release loan reserves.
"Our very strong results this quarter were driven by a significant improvement in the credit performance of our loyal customer base, along with continued solid growth in card-member spending," said David Nelms, chairman and chief executive officer of Discover.
On April 21, the company redeemed $1.2 billion of preferred stock issued to the U.S. Treasury Department under the Troubled Asset Relief Program (TARP). This accelerated the accretion of the discount on the preferred stock. The accretion of the discount and preferred stock dividends reduced earnings per share by 13 cents.
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