Discover Financial Services reported a rise in quarterly profits Tuesday on strong growth in its loan portfolio.

The Riverwoods, Ill., card issuer recorded net income of $644 million, or $1.35 per share, in the second quarter. That was up from $602 million, or $1.20 per share, in the second quarter of last year, and it also surpassed the $1.30 per share consensus of analysts surveyed by Bloomberg.

Discover's loans ended the quarter at $65.8 billion, or up 7% from a year earlier. Its flagship credit card business saw portfolio growth of 6%, while personal loans and newly originated private student loans each expanded at a 26% clip.

Meanwhile, the chargeoff rate on credit card loans was 2.33%, which was down one basis point from the same period a year earlier.

"Our record earnings per share this quarter reflect outstanding fundamental performance in our direct banking segment in terms of loan growth and credit performance," Chief Executive David Nelms said in a news release, referring to the part of the company that includes its credit card, student loan, personal loan and retail banking businesses.

Discover recorded a $360 million provision for loan losses, up $135 million from the prior year, as it bolstered its loan loss reserves.

The company saw its mortgage income fall, and its expenses for employee compensation and benefits rose as its headcount grew.

Discover's credit card yield was 12.1%, up 13 basis points from a year earlier. The company attributed the increase partly to a higher percentage of its credit card holders revolving their monthly balances.

Revenue net of interest expense was $2.17 billion, or up 6% from a year earlier. Net interest margin grew by 40 basis points to 9.84%.

Discover reported a 23% return on equity, unchanged from a year earlier.

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