Discover Financial Services saw stronger revenue during its second quarter but lower net income compared with a year earlier, the company said June 19.
The Riverwoods, Ill.-based firm blamed lower loan-loss reserve releases for its weaker earnings compared to the prior year's second quarter.
Net income for the quarter ended May 31 declined 10.5%, to $537 million from $600 million, during the same period a year earlier. Revenue net of interest expense rose 6.3%, to $1.85 billion from $1.74 billion.
Discover's Direct Banking unit, which includes credit card lending, generated income of $820 million, down 7.2% from $883 million.
The company's credit card sales volume for the quarter ended May 31 rose 5.2%, to $26.1 billion from $24.8 billion.
Total credit card loans at the end of the quarter rose 3.6%, to $46.6 billion from $45 billion.
The charge-off rate on credit card loans declined 222 basis points, to 2.79% from 5.01% a year earlier.
Discover's Payment Services unit, which includes its Pulse PIN-debit card brand, drove income of $47 billion, up 9.3% from $43 billion a year earlier.
Transaction volume processed through the Pulse network rose 14.4%, to $42 billion from $36.7 billion a year earlier. Card volume from third-party issuers rose 22.2%, to $2.2 billion from $1.8 billion. Network volume processed through Discover's Diners Club International brand declined 2.7%, to $7.2 billion from $7.4 billion.
"Our results this quarter reflect outstanding fundamental performance in both of our business segments and continued improvement in credit performance," David Nelms, Discover's chairman and chief executive officer, said in a press release.