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.
