Discover Financial Services' fiscal fourth-quarter profit jumped a better-than-expected 47% as the credit-card company reported improved revenue and growth across its loan products.
As both a lender to cardholders and a processor of transactions, Discover has seen delinquency rates on its credit cards steadily decline as customers pay down balances on time. Now, like many lenders, Discover is faced with raising its loan balances, a challenge across the industry as consumers remain wary to take on fresh debt.
Discover on Thursday reported its total loans grew 17% from the prior year to $57.34 billion, a record sum according to the company. Credit card loans grew 3.3% to $46.64 billion.
"We are pleased to report another quarter of very strong performance as we generated organic growth in all loan products, had continued improvement in credit and demonstrated solid expense control," Chairman and Chief Executive David Nelms said.
Citing the quarter's strong results and solid capital levels, the company also said Thursday it was raising its quarterly dividend by 67%, to 10 cents a share from 6 cents paid out previously. The increase will cost company roughly an added $22 million a quarter.
For the quarter ended Nov. 30, Discover reported a profit of $513 million, or 95 cents a share, up from a prior-year profit of $350 million, or 64 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 92 cents a share.
Revenue net of interest expense rose 13% to $1.81 billion, matching analyst expectations.
The delinquency rate for credit card loans over 30 days past due declined to 2.39%, compared with 4.06% a year ago and 2.43% in the prior quarter.
Provisions for loan losses totaled $319 million, compared with $383 million a year ago and $100 million in the previous quarter.
Shares were up 1.9% premarket to $24.26. Year to date, the stock is up 29%.