Discover Financial Services (NYSE:DFS) released its first-quarter results after Wednesday's closing bell. Here's a look at the key details from the quarter.
The Details: Discover reported quarterly earnings of $4.25 per share, which beat the analyst consensus estimate of $3.39 by 25.37%. Quarterly revenue came in at $4.25 billion, which beat the analyst consensus estimate of $4.22 billion and is an increase over revenue of $4.21 billion from the same period last year.
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For the first quarter, Discover reported:
- Digital Banking pretax income of $1.4 billion for the quarter was $316 million higher than the prior year period.
- Total loans ended the quarter at $117.4 billion, down 7% year-over-year as a result of the student loan sale, and down 3% sequentially due to seasonal trends.
- Net interest income for the quarter increased $71 million year-over-year, or 2%, driven by net interest margin expansion.
- Net interest margin was 12.18%, up 115 basis points versus the prior year, benefiting from the student loan sale.
- Non-interest income increased $15 million, or 3% from the prior year period primarily due to higher net discount and interchange revenue.
- The total net charge-off rate was 4.99%, up seven basis points from the prior year period. Excluding the impact of the student loan sale, the net charge-off rate would have declined.
- Provision for credit losses of $1.2 billion decreased $253 million from the prior year quarter, driven by a $190 million favorable reserve change and a $97 million decrease in net charge-offs.
- Payment Services pretax income of $91 million was up $9 million year-over-year, or 11% primarily due to volume growth in PULSE and Diners Club as well as lower expenses.
“Discover’s solid first quarter financial performance benefited from a strong net interest margin and positive credit trends,” said Michael Shepherd, Discover’s Interim CEO.
“These results reflect our good execution and the strength of our business model. We are pleased that Capital One has received all required approvals and look forward to completing our merger.”
The company confirmed that it expects the merger with Capital One Financial Corp. (NYSE:COF) to close on or about May 18, 2025.
DFS Price Action: According to data from Benzinga Pro, Discover stock closed Wednesday up 3.63% at $176.46.
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