RIVERWOODS, Ill. – Discover Financial Services yesterday reported a second quarter net of $209.2 million, made possible only because of $473 million payments form Visa and MasterCard as part of last year’s $2.75 billion settlement in the antitrust case brought against the two card giants.
The payment boosted Discover's profit by $295 million after taxes. The lawsuit claimed MasterCard and Visa harmed Discover's business by preventing their member banks from issuing credit cards for Discover's network.
Discover is the parent of Pulse EFT, the credit union and bank card network. Earlier this year, Discover became a bank holding company and received $1.2 billion from the federal government under the Troubled Asset Relief Program.
During the quarter, Discover's provision for loan losses more than tripled to $643.9 million from $211 million in the same quarter the previous year. The company's charge-off rate, the percentage of debt it does not expect to be repaid, climbed to 7.79% from 6.48% in the first quarter.
