Discover Financial Services more than doubled its third-quarter net income to $649 million as its customers increased their spending and its credit card loan portfolio grew for the first time in over two years.
The Riverwoods, Ill.-based credit card company said Sept. 22 that it earned $1.18 per share in its fiscal third quarter ended Aug. 31. That compared to a profit of $261 million, or 47 cents per share, during the same period last year (
Discover’s quarterly credit card charge-off rate fell 388 basis points from a year earlier to 3.85% from 7.73%. Its card-loan portfolio grew 2% in what was the first such increase for Discover since the second quarter of 2009. Discover card sales volume totaled $26.3 billion, up 9.6% from $24 billion. Pulse network volume totaled $35.1 billion, up 14.7% from $30.6 billion.
In a press release, Chief Executive David Nelms hailed the reemergence of year-over-year growth in Discover card receivables after the recession. Banks and credit card companies have seen their losses on bad loans fall since the worst of the financial crisis, but consumer demand for new loans has remained weak.
Discover has been trying to expand beyond its traditional credit card lending and network business into online banking, student lending and mortgage origination. But the company is still facing some hurdles. Last month its deal to buy $1.1 billion of banking deposits from Allstate Corp. fell through.
