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Discover posts Q3 profit

21 September 2010  |  1903 views  |  0 Source: Discover Financial Services

Discover Financial Services (NYSE: DFS) today reported net income for the third quarter of 2010 of $261 million, as compared to net income of $577 million for the third quarter of 2009.

The results for the prior year included approximately $287 million (after tax) related to the Visa/MasterCard antitrust litigation settlement.

Third Quarter Highlights

* Discover card sales volume of $24 billion in the quarter continued to show positive growth trends, increasing 5% from the prior year.
* Net interest margin of 9.16% remained relatively stable as compared to the prior quarter, as the impact of legislative changes was offset by lower interest charge-offs.
* Credit performance continued to improve, with net charge-offs down $102 million from the prior quarter and a net charge-off rate for the third quarter of 7.18%.
* Loans over 30 days delinquent declined $180 million in the quarter, which led to a $187 million release of loan loss reserves.
* Payment Services processed record transaction volume in the quarter of $39 billion and showed continued strong results with profit before tax up 36% from the prior year.
* Deposit balances originated through direct-to-consumer and affinity relationships grew $1.5 billion in the quarter to $19.1 billion.

"The very positive credit trends that began to manifest themselves earlier this year continued to benefit our results this quarter," said David Nelms, chairman and chief executive officer of Discover. "The ongoing improvement in the outlook for credit performance of our cardmembers has enabled us to accelerate investments for long-term profitable growth. In addition, Discover card spending continued to grow nicely this quarter and our third-party credit and debit network businesses achieved record transaction volumes."

Read the full statement here.

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