Discover Financial Services experienced fewer credit card delinquencies in the second quarter ended June 30, as well as growth in its online bank, leading to a boost in quarterly profits to $602 million. In the period last year, Discover earned $525 million.
Credit card loan delinquencies more than 30 days past due reached a record low of 1.58%, the Riverwoods, Ill.-based company reported. Discover's return on equity was 23%, down from 24% a year ago.
"Discover's strong overall results were driven by profitable growth in direct banking and continued improvement in credit," Discover CEO David Nelms said in a statement.
Operating expenses in the second quarter reached $820 million, up from $758 million a year earlier. Employee compensation was up because of the addition of a mortgage business. Marketing expenses also were up as a result of an increase in credit-card marketing and the new mortgage business.
Discover also disclosed that, in the second quarter, it repurchased 7 million common shares for $340 million. The number of shares outstanding are down 1%. It has also increased its dividend. Discover's results exceeded Wall Street's expectations. The average estimate of 23 analysts surveyed by Bloomberg News was $1.15 a share while the actual figure came in a $1.20 a share.