Shares of Discover Financial Services slid after hours on Wednesday after the credit-card giant reported fourth-quarter profits that missed expectations and said it had set aside more money to cushion against potentially tougher conditions for consumers. The results are the latest in a bumpy ride over the past several months for Discover
DFS,
-0.84%,
which has dealt with a leadership shake-up, questions about controls internally and higher costs related to compliance.
The company’s provision for credit losses stood at $1.9 billion during the end of the quarter, up $1 billion from the same quarter of 2022, driven by an increase in net charge-offs, or debt a lender thinks it won’t be able to recover. The company’s total net charge-off rate was 4.11% in the fourth quarter, up from 2.13% year over year. John Owen, Discover’s interim chief executive, said that while net charge-offs increased, they were at the “low end of our expected range.” But the provision, as well as an 18% jump in operating expenses overall, ate into company profits. Discover reported fourth-quarter net income of $388 million, or $1.54 a share — a big drop from $1.03 billion, or $3.74 a share, in the same quarter of 2022. Revenue rose 13% to $4.19 billion, from $3.72 billion in the prior-year quarter. Analysts polled by FactSet expected Discover to to earn $2.50 a share in the fourth quarter, on revenue of $4.1 billion. Net-interest margin — the difference between what financial institutions collect on inte …
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DFS,
-0.84%,
which has dealt with a leadership shake-up, questions about controls internally and higher costs related to compliance.
The company’s provision for credit losses stood at $1.9 billion during the end of the quarter, up $1 billion from the same quarter of 2022, driven by an increase in net charge-offs, or debt a lender thinks it won’t be able to recover. The company’s total net charge-off rate was 4.11% in the fourth quarter, up from 2.13% year over year. John Owen, Discover’s interim chief executive, said that while net charge-offs increased, they were at the “low end of our expected range.” But the provision, as well as an 18% jump in operating expenses overall, ate into company profits. Discover reported fourth-quarter net income of $388 million, or $1.54 a share — a big drop from $1.03 billion, or $3.74 a share, in the same quarter of 2022. Revenue rose 13% to $4.19 billion, from $3.72 billion in the prior-year quarter. Analysts polled by FactSet expected Discover to to earn $2.50 a share in the fourth quarter, on revenue of $4.1 billion. Net-interest margin — the difference between what financial institutions collect on inte …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]