Discover Financial Services' shares rose nearly 2% in after hours trading on Tuesday after the credit card issuer reported better-than-expected earnings.
The Riverwoods, Ill., company said net income in its fiscal first quarter was $465 million, compared with a net loss of $104 million a year earlier. The growth was driven by improvements in credit performance and an increase in card sales, it said in a press release.
It earned 84 cents per diluted share in the quarter ending Feb. 28, up from a net loss of 22 cents per diluted share a year earlier. Analyst had predicted earnings of 51 cents per share.
David Nelms, Discover's chief executive and chairman, said in the release that the company's direct banking strategy could be a boon for future business.
"I am optimistic that our additional student loan capabilities, additional marketing investments and the gradually improving economy will further contribute to profitable loan growth in the future," Nelms said.
In September, Discover announced that it would acquire Student Loan Corp. for $600 million from Citigroup. That deal closed this past quarter.
Net revenue for the quarter was $1.7 billion, up 2.5% from a year earlier.
Discover's stock closed down 1.7% at $22.25 on Tuesday before it reported earnings.
