Positive credit trends and an overall improvement of credit performance helped produce a strong fiscal third quarter for Discover Financial Services, the Riverwoods, Ill-based company announced Sept. 20.

Discover’s U.S. card-sales volume totaled $24 billion for the quarter ended Aug. 31, up 5.3% from $22.8 billion a year earlier, surpassing the company’s 2010 fiscal second quarter record high of $22.9 billion (see story).

Credit card loan receivables decreased 6%, to $45.2 billion from $48.1 billion, while total loan receivables were down 1.6%, to $50.1 billion from $50.9 billion.

The 30 day-plus delinquency rate for the quarter was 4.16%, down 95 basis points from 5.11% a year earlier. The net charge-off rate decreased 122 basis points, to 7.18% from 8.40%.

Total third-party payments-segment sales volume increased 8.1%, to $38.9 billion from $36 billion during the same quarter last year. Total volume from third-party Discover issuers rose 28.6%, to $1.8 billion from 1.4 billion.

Sales volume for Discover’s Pulse PIN-debit network rose 8.9%, to $30.6 billion from 28.1 billion a year ago. Total transactions processed on the Pulse network rose 17.1%, to $882 million from $753 million a year ago.

Diners Club International volume totaled $6.54 billion, up 1.1% from $6.47 billion a year ago.

As a company, Discover reported net income of $261 million, down 54.8% from $577 million a year earlier, when it included $287 million, after tax, related to the Visa Inc. and MasterCard Worldwide antitrust-litigation settlement (see story).  Revenue net of interest expense decreased 7.6%, to $1.71 billion from $1.85 billion a year earlier.

The company’s Payment Services segment generated a pretax profit of $36.8 million, up 35.8% from $27.1 million.


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