Discover Financial fourth-quarter profit jumps on lower loan loss provisions

Discover Financial Services

22/01/2025 22:19

Jan 22 (Reuters) - U.S. credit card issuer Discover
Financial  DFS.N  posted a more than threefold increase in
fourth-quarter profit on Wednesday, helped by a drop in
provisions for credit losses and a rise in interest income. 
    The Federal Reserve's decision to lower interest rates and
hopes of a soft landing for the economy helped ease lenders'
concerns about potential credit defaults in 2025. 
    Discover's provision for credit losses fell to $1.20 billion
in the quarter ended Dec. 31 from about $1.91 billion in the
year-ago period.
    Strong consumer spending has helped credit card-focused
lenders rake in a higher income from interest. 
    Riverwoods, Illinois-based Discover recorded net interest
income of $3.63 billion for the fourth quarter, up nearly 4.7%
from the same quarter last year.
    "Discover's fourth quarter results capped off a successful
2024 as loan growth, margin expansion, and credit improvement
led to strong financial performance," said interim CEO Michael
Shepherd in a statement. 
    Capital One Financial  COF.N , which is acquiring Discover
for $35.3 billion in an all-stock deal, also recorded a jump in
fourth-quarter profit on Tuesday, helped by higher interest
income. 
    The merger between Capital One and Discover would form the
sixth-largest U.S. bank by assets and a U.S. credit card
behemoth. 
    Discover posted a net income of $1.29 billion, or $5.11 per
share, in the October-to-December period, compared to $366
million, or $1.45 per share, in the year ago period. 
    Shares of the company, which jumped 54% in 2024, were up
marginally in trading after the bell. 

 (Reporting by Pritam Biswas in Bengaluru; Editing by Shailesh
Kuber)
 ((Pritam.Biswas@thomsonreuters.com;))