Discover Financial Services Delivers Impressive Results, Reports Record Earnings

Thanks to strong business operations, Discover Financial Services (NYSE: DFS  ) announced that its earnings per share jumped from $1.20 in the second quarter of 2013 to $1.35 in the most recent quarter.

Net income available to Discover shareholders rose 7% to stand at $630 million for the three months ending in June. With the number of common shares falling by 5% thanks to repurchases, earnings per share rose by 13%.

Income growth came down almost entirely to the loan portfolio, which rose by $4.2 billion over the past year to stand at $65.9 billion. Credit card loans rose by $3 billion, or 6%, over the past year. Discover also saw sizable expansion in its personal loans, which grew 26% to $4.6 billion.

Net interest margin -- the difference between what a company collects on loans versus what it pays out on deposits and other borrowings -- expanded from 9.44% in the second quarter of last year to 9.84% in the most recent quarter.

As a result of the growth in its loan portfolio plus the expansion of rates, Discover's net interest income rose 11% to $1.6 billion.

Discover did see a $10 million decrease in its Protection Products Revenue, and other income fell by $40 million as a result of lower mortgage-related income.

However, this drop was almost entirely offset by a $37 million drop in other expenses. Somewhat surprisingly, the company also saw its marketing and business development expenses fall by 9%, or $17 million.

"Our record earnings per share this quarter reflect outstanding fundamental performance in our Direct Banking segment in terms of loan growth and credit performance," said Chairman and CEO David Nelms in the earnings announcement. "Our continued focus on gaining wallet share with existing customers and acquiring new accounts with Discover IT drove strong card receivables and sales growth of 6%."

Overall, the operating businesses at Discover has been on an impressive run as of late, and this quarter was no exception.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3039662, ~/Articles/ArticleHandler.aspx, 9/5/2015 4:01:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:02 PM
DFS $51.40 Down -0.80 -1.53%
Discover Financial… CAPS Rating: ****