Discover Financial Services, the credit-card issuer that's expanded to student lending and unsecured personal loans, posted profit that beat analysts' estimates as the firm bought back about 8 million shares of stock and provisions for loan losses declined.
Third-quarter net income fell 5 percent to $612 million, or $1.38 a share, from $644 million, or $1.37, a year earlier, the Riverwoods, Illinois-based company said Tuesday in a statement. The average estimate of 22 analysts surveyed by Bloomberg was for profit of $1.33 a share. Shares of common stock declined 1.8 percent from the prior quarter.
Chief Executive Officer David Nelms, 54, has increased Discover's direct student-loan business and sought to drive more transactions to the company's payments network. The company in June closed its mortgage-origination business amid record-low interest rates that have made home lending less profitable and more volatile for U.S. banks.
"Strong credit performance and continued share buybacks drove earnings per share growth," Nelms said in the statement. "While total loan growth slowed slightly due to consumer spending levels, it remained solid."
Discover shares declined 16 percent this year through the close of regular trading, compared with the 4.4 percent drop of the 88-company Standard & Poor's 500 Financials Index.