2024-07-17 21:41:35
Discover Financial Services reported a 70% jump in second-quarter profit on Wednesday as the high-rate environment allowed the US credit issuer to increase its interest income.
Credit card-focused lenders have outperformed the wider industry this year, driven by a rise in interest income. Companies like Discover are protected from the volatility of the mortgage market because customers pay higher interest on their credit cards.
Discover, headquartered in Riverwoods, Illinois, reported net interest income of $3.52 billion in the second quarter, nearly 11% higher than the year-ago quarter.
Discover’s allowance for credit losses fell to $739 million in the quarter ended June 30, compared with about $1.31 billion in the same period a year earlier.
Discover’s net income jumped to $1.52 billion, or $6.06 per share, from $895 million, or $3.54 per share.
Earlier today, Discover said it would sell a portfolio of student loans to buyout giants Carlyle and KKR for up to $10.8 billion.
Separately, Capital One said Wednesday it would commit $265 billion over five years to lending, philanthropic and investment activities if its Discover purchase goes through.
The $35 billion acquisition of Discover will create the largest US credit card issuer by balance sheet and the sixth largest bank by assets. It will also allow Capital One to control the Discover card payment network, making it the fourth payment network operator after Visa, Mastercard and American Express. (Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Maju Samuel)
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