Discover Financial Services said its chargeoff rate for bad loans will probably rise to about 8% this quarter.

Its chargeoffs for the fiscal first quarter, which ended Feb. 28, were about 6.6%, the Riverwoods, Ill., company said in a presentation on its Web site Wednesday.

Discover said last month that it would cut 4.2% of its work force because of the rising chargeoffs and a decline in consumer spending. In January, the company said chargeoffs would climb beyond 7% in its second quarter.

The lender, which received $1.2 billion from the Treasury, added $504 million to its provision for soured loans in its fiscal first quarter. "We will continue to build reserves reflecting credit conditions," Discover said in Wednesday's presentation.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.