RIVERWOODS, Ill.–New federal restrictions on credit card fees are being cited by Discover Financial Services as the reason for a decline in quarterly profits.
Discover reported that its fiscal fourth-quarter profits had declined 16% as the result of new limits on card APRs and the resulting net income. For the three months ended Nov. 30 Discover Financial Services reported earnings of $371 million, down from $444 million one year earlier.
The results, the company said, were actually better than expected. It further said it expects profitability to increase as charge-offs continue to decline.
Discover reported that its managed credit card charge-offs has increased 295 basis points over the same period one year earlier, to 8.43%. The issuer of the Discover Card is projecting annualized charge-offs of 8.4% to 8.9% for the current quarter.
