Discover Financial Services tops Q3 estimates, shares rise

NEW YORK - Discover Financial Services (NYSE:DFS ) reported better-than-expected third quarter results, driven by increased net interest margin and modest loan growth. The company's shares rose 1.32% following the announcement.

Discover posted earnings per share of $3.69, surpassing analyst estimates of $3.45. Revenue for the quarter came in at $4.45 billion, exceeding the consensus forecast of $4.35 billion.

Net income rose 41% YoY to $965 million, compared to $683 million in the same quarter last year. Total loans increased 4% YoY to $127.0 billion, while total revenue net of interest expense grew 10% to $4.45 billion.

The company's net interest margin expanded to 11.38%, up 43 basis points from the prior year. However, the total net charge-off rate increased to 4.86%, up 134 basis points YoY, reflecting continued seasoning of recent vintages.

"Discover's financial performance remained strong in the third quarter, benefiting from increased net interest margin, modest loan growth, and some credit improvement," said Michael Shepherd, Discover's Interim CEO and President.

The company also reported progress on its private student loan portfolio sale, completing the first of four closings. This transaction resulted in a $70 million gain, contributing to a 13% increase in non-interest income.

Discover's Board of Directors declared a quarterly cash dividend of $0.70 per share, payable on December 5, 2024, to holders of record at the close of business on November 21, 2024.

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Source: Investing.com