Discover Financial Services rode loan growth in every segment of its consumer finance business to net income of $644 million in the third quarter.
The Riverwoods, Ill., company reported that loans in its flagship credit card business rose 6.6% from the same period a year earlier, personal loans were up 20.9%, and private student loans increased by 4.5%.
Those improvements in lending at Discover contributed to net interest income of $1.64 billion, a 9% increase from the third quarter of 2013.
The loan growth more than offset an essentially flat quarter in other income.
I am very pleased with Discovers results this quarter, which were driven by robust card loan growth, strong revenue growth and near historically low credit performance, Discover Chief Executive Officer David Nelms said in a news release. During the earnings conference call, Nelms addressed Apple PayDiscover was not part of Apple Pay's original release, but is in discussions to support Apple's mobile payment initiative.
"We're excited about the prospects of mobile payments generally," Nelms said. "We certainly do expect to be participating in Apple Pay. I dont know when that will be, but we are actively working to be included over time."
The companys chargeoff rate for credit card loans increased to 2.16%, an 11-basis-point rise from the same period a year earlier. The percentage of credit card loans that were delinquent by 30 days or more rose to 1.71%, a four-basis -point increase.
The company said that its credit card yield rose slightly, as a higher percentage of its customers rolled over their balances, rather than paying their entire bill.
Discovers provision for loan losses was $356 million, a $23 million increase from the same period a year earlier. Expenses rose by 6% from the third quarter of last year, as the company added employees and invested more in marketing.
The companys earnings per share of $1.37 beat the $1.34 consensus of analysts surveyed by Bloomberg.