Discover Financial Services is reporting a net loss of $104 million for the fiscal first quarter ended Feb. 28.; the company reported net income of $120 million for the same period a year ago that included approximately $297 million in after-tax income from antitrust settlements with Visa Inc. and MasterCard Worldwide. Included in the past quarter’s earnings was a pre-tax addition to loan-loss reserves of $305 million ($185 million after tax), bringing Discover’s after-tax reserve to approximately $297 million.

Discover’s U.S. Card unit posted a 5% increase in revenue, to $22 billion. The company’s student loan portfolio increased $2 billion from a year ago, with credit card loans decreasing to $45.8 billion from $49 billion. Discover attributes the decline in credit card loans to lower balance-transfer activity, partially offset by increased sales volume. In total, loans ended the quarter at $50 billion, down 2% from $51 billion.

The over-30-day delinquency rate for the quarter was 5.05%, up one basis point from 5.04%, while the first-quarter net charge-off rate was 8.51%, up 217 basis points from 6.34%.

The net charge-off rate increased to 8.51% during the quarter, up 203 basis points from a year earlier and up 8 basis points from last year’s fourth quarter. The increase in both periods reflects elevated levels of consumer bankruptcies and unemployment, partially offset by a higher mix of student loans, which have a lower charge-off rate, Discover says. Discover expects the net charge-off rate for the second quarter to be between 8% and 8.5%.

The Payment Services segment pre-tax profit was up 28%, to $37 million, while transaction volume was up 2%, to $36 billion.

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