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Discover Financial Services also is showing continued deterioration in credit quality. The charge-off rate for Discover increased 59 basis points in February, to 7.15% card receivables from 6.56% in January. Delinquencies increased 23 basis points, to 5.52% from 5.29% in January. Excess spread, or the amount by which income in the securitization trust exceeds costs, increased 26 basis points, to 8.38% from 8.12%, and portfolio yield increased 89 basis points, to 18% from 17.11%. In notes to clients Monday, Sanjay Sakhrani, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., wrote that the delinquency trends were worse than he expected at both Discover and American Express Co. The charge-off trend at Discover was better than his expectations but "in-line to worse" at AmEx. In a note to clients Monday, John Williams, an analyst at Macquarie Group, wrote that Discover "has not shown the same degree of accelerating deterioration we have seen in competitors' portfolios. That said, losses are still losses, and we expect further challenges as unemployment ticks up and the U.S. consumer continues to struggle."
