Discover Sees 6% Growth in Card Loans, Sales Volume in 4Q

Discover Sees 6% Growth in Card Loans, Sales Volume in 4QDiscover Financial Services, the issuer of Discover credit cards, reported a higher net income for the fourth quarter as card customers purchased more and the company’s charge-offs fell to record lows.
However, Discover failed to meet Wall Street projections. Expectations are running high for credit card issuers as revolving loan balances have declined since the financial crisis. Americans have cut back on their debt loads to get their financial houses in order.
While spending on cards has rebounded, consumers are improving at paying off most or all of their balances at month’s end.
Discover seems to be seeing the best of both sides. Total loans, credit card loans and Discover card sales volume all grew 6 percent from the prior year.
Credit card net charge-offs reached all-time lows for the company with a net loan-loss rate of 2.29 percent. Credit card loan delinquencies over 30 days past due increased 5 basis points sequentially to 1.86 percent.
Discover card sales volume increased to $26.5 billion, as credit card loans totaled $49.6 billion at the end of the fourth quarter. Private student loans rose 6 percent, while personal loans climbed 24 percent, Discover said.
“Our strategy and business model are working as we achieved organic growth in all of our lending products,” said David Nelms, chairman and CEO of Discover. “I am proud of our strong performance this year and our achievement of record net income, record volumes and a strong return on equity.”
Discover, the nation’s sixth-largest credit card issuer,  agreed earlier this year to refund about $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty as part of an agreement with the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB).
The agencies allege that Discover used deceptive telemarketing and sales tactics to mislead consumers into paying for various credit card “add-on products” – including payment protection, credit score tracking, identity theft protection, and wallet protection, the FDIC and CFPB said in a statement.

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