Discover Financial Services has released its monthly credit card charge-off and delinquency statistics, showing the performance of its credit card portfolio over the past two years. According to the data, as of January 31, 2024, the ending loans amounted to $101.0 billion, with an average loan balance of $101.3 billion. The net principal charge-off rate stood at 5.23%, while the delinquency rate for 30 or more days was 4.02%.
Comparing these figures to the same period a year ago, there has been a noticeable increase in both charge-off and delinquency rates. In January 2023, the net principal charge-off rate was 3.40% and the delinquency rate was 2.74%. This indicates a significant rise in credit card delinquencies and charge-offs over the past year.
On the market, Discover Financial Services' shares have seen a 0.7% increase, reaching a trading price of $109.11.
In response to the data, [CEO/President/Management] stated, "While we have seen an increase in delinquency and charge-off rates, we remain confident in the overall performance of our credit card portfolio. We are actively managing our risk and are committed to maintaining a healthy credit environment for our customers."
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $10,893 | $11,993 | $11,095 | $10,651 | $12,864 | $16,833 |
| Revenue Growth | n/a | 10.1% | -7.49% | -4.0% | 20.78% | 30.85% |
| Interest Income (MM) | $8,754 | $9,463 | $9,230 | $9,517 | $10,999 | $12,698 |
| Operating Margins | 33% | 32% | 13% | 66% | 45% | 28% |
| Net Margins | 25% | 25% | 10% | 51% | 34% | 21% |
| Net Income (MM) | $2,742 | $2,957 | $1,141 | $5,449 | $4,392 | $3,586 |
| Depreciation & Amort. (MM) | $435 | $436 | $485 | $531 | $561 | $491 |
| Earnings Per Share | $7.79 | $9.08 | $3.6 | $17.83 | $15.5 | $13.48 |
| EPS Growth | n/a | 16.56% | -60.35% | 395.28% | -13.07% | -13.03% |
| Diluted Shares (MM) | 345 | 320 | 307 | 300 | 278 | 250 |
| Free Cash Flow (MM) | $4,937 | $5,912 | $5,935 | $5,825 | $6,904 | $7,569 |
| Capital Expenditures (MM) | $254 | $284 | $261 | $194 | $236 | $293 |
| Total Debt (MM) | $27,228 | $25,701 | $21,241 | $18,477 | $20,108 | $19,467 |
| Net Debt / EBITDA | 3.45 | 4.4 | 4.0 | 1.28 | 1.79 | 1.96 |
Discover Financial Services has rapidly growing revenues and a flat capital expenditure trend and generally positive cash flows. Additionally, the company's financial statements display low leverage levels and strong operating margins with a stable trend. However, the firm has EPS growth achieved by reducing the number of outstanding shares.
