Discover Financial quarterly profit jumps on robust interest income, lower provisions
6:40 pm Wednesday, October 16th, 2024
(Reuters) -Discover Financial’s third-quarter profit jumped 43% as the U.S. credit card issuer’s net interest income climbed and its provisions for potential sour loans fell, the company said on Wednesday.
The company recorded net interest income of $3.66 billion in the quarter, 10% higher than the year-ago quarter.
Credit card firms’ interest incomes have benefited as the Federal Reserve raised its benchmark rates multiple times over the last four years to tame sticky inflation.
The U.S. central bank cut its key interest rate last month and is expected to continue with its monetary easing policy.
Meanwhile, Discover said it was working with the Securities and Exchange Commission to resolve its accounting approach to a card misclassification issue.
In July 2023, Discover said it had overcharged merchants and their banks due to misclassifying some cards. It increased its liability to $1.2 billion to refund affected merchants.
A resolution is not expected to impact historical earnings, it said on Wednesday.
Meanwhile, the company’s proposed $35 billion acquisition by Capital One announced in February is facing lawsuits from consumers and tough scrutiny by some lawmakers.
Riverwoods, Illinois-based Discover’s net income rose to $928 million, or $3.69 per share, from $647 million, or $2.59 per share, a year earlier.
Discover’s provision for credit losses fell to $1.47 billion in the three months ended Sept. 30 from about $1.70 billion.
(Reporting by Jaiveer Singh Shekhawat; Editing by Sriraj Kalluvila)
