Discover Financial Services is taking a financial hit from the end of rock-bottom loss rates in the credit card business.

The $94.8 billion-asset firm reported solid revenue growth during the first quarter, as its flagship credit card portfolio expanded by 7%. But Discover’s chargeoff rate climbed to its highest level in five years, and the firm increased its provision for loan losses by 38%, which more than offset the revenue gains.

“The credit environment remains favorable relative to historical norms,” said Discover CEO David Nelms. Bloomberg News

The Riverwoods, Ill., company reported net income of $564 million during the first quarter, down slightly from $575 million in the same period a year earlier. Earnings per share of $1.43 fell a penny short of the consensus estimates of analysts surveyed by FactSet Research Systems.

Overall, Discover’s loan book grew by 8% to $75.9 billion. The company’s relatively small personal loan portfolio enjoyed the fastest expansion, growing by 20% to $6.7 billion.

The loan growth helped to fuel an 8% rise in net interest income. Discover’s net interest margin rose by 13 basis points to 10.07%. And the firm’s operating expenses were virtually flat from a year earlier at $885 million.

But Discover’s first-quarter performance was hurt by credit deterioration, particularly in its card business. The rate of credit card loans that were at least 30 days delinquent rose to 2.06%, up from 1.68% a year earlier. The net chargeoff rate in the cards business climbed to 2.84%, up from 2.34% in the first quarter of 2016.

The company said that it set aside more money for loan losses primarily because net chargeoffs rose.

Discover CEO David Nelms said in a press release that the higher loss provision is a byproduct of loan growth in recent quarters, and he sought to keep the rising losses in perspective.

“The credit environment remains favorable relative to historical norms,” he said.