Discover Financial Services has just released its 10-K report. The company, based in Riverwoods, Illinois, operates in two segments, Digital Banking and Payment Services, providing digital banking products and services and payment services in the United States. It offers credit cards, private student loans, personal loans, home loans, and deposit products, and operates the Discover Network, the PULSE network, and Diners Club International.
The 10-K report highlights the following financial metrics and changes:
- Net income was $2.9 billion, or $11.26 per diluted share, compared to net income of $4.4 billion, or $15.44 per diluted share, in the prior year.
- Total loans grew $16.3 billion, or 15%, to $128.4 billion.
- Credit card loans grew $12.1 billion, or 13%, to $102.3 billion.
- The net charge-off rate for credit card loans increased 185 basis points to 3.90%, and the delinquency rate for credit card loans over 30 days past due increased 134 basis points to 3.87%. Direct-to-consumer deposits grew $13.5 billion, or 19%, to $84.0 billion.
- Payment Services transaction volume for the segment was $364.6 billion, up 10%.
The outlook for 2024 includes expectations for relatively flat total loans, a decrease in net interest margin based on the interest rate environment, an increase in the total net charge-off rate driven by higher delinquencies, and an increase in total expenses driven by investments in compliance and risk management capabilities.
Regulatory developments include proposed amendments to the risk-based capital framework and proposals requiring banking institutions to have minimum levels of outstanding long-term debt. The company also discussed the impact of the transition from LIBOR to SOFR on its capital markets securities and subordinated notes.
For more information, read the company's full 10-K submission here.
