Discover Financial Services
DFS,
on Wednesday signaled it was bracing for more soured credit and more signs that customers were falling behind on payments, despite reporting fourth-quarter results that beat expectations. The banking and credit-card provider said it had put aside $883 million for potential credit losses through the quarter, up $620 million from the identical quarter last yr. Management also said its overall net charge-off rate — a measure of debt an organization thinks is unlikely to be recovered — rose to 2.13% through the quarter, from 1.37% within the prior-year quarter. Shares fell 6% after hours. The outcomes come as concerns grow about rising prices and their effect on consumers. But a jump in loan growth helped Discover’s fourth-quarter results. Discover reported fourth-quarter net income of $1.03 billion, or $3.77 a share, compared with $1.07 billion, or $3.64 a share, in the identical quarter last yr. Revenue jumped 27% to $3.73 billion, compared with $2.94 billion within the prior-year quarter. Net interest income climbed 24%. For the fourth quarter, analysts polled by FactSet expected earnings per share of $3.65, on revenue of $3.668 billion. Discover ended the quarter with $112.1 billion in loans, up 20% from the identical quarter in 2021. Management also said its board declared semi-annual money dividends, in addition to a quarterly money dividend of 60 cents a share.