Discover better results, but growing signs that customers are falling behind; dividend announcement company
Discover financial services
on Wednesday signaled that it was bracing for tougher credit and more signs that consumers were slow to pay, despite reporting fourth-quarter results that beat expectations. The bank and credit card provider said it set aside $883 million for possible credit losses during the quarter, up $620 million from the same period last year. Management also said its overall net ratio – a measure of debt that a company considers unlikely to be recovered – rose to 2.13% in the quarter, from 1.37% in the previous quarter. previous quarter. Shares fell 6% after hours. The results come as concerns grow about rising prices and their effect on consumers. But jumpy loan growth helped Discover’s fourth-quarter results. Discover reported fourth-quarter net income of $1.03 billion, or $3.77 a share, compared with $1.07 billion, or $3.64 a share, in same quarter of last year. Revenue rose 27% to $3.73 billion, compared with $2.94 billion in the previous quarter. Net interest income increased 24%. For the fourth quarter, analysts polled by FactSet expected earnings per share of $3.65, on revenue of $3.668 billion. Discover ended the quarter with a loan of $112.1 billion, up 20% from the same period in 2021. Management also said its board announced a semi-annual cash dividend. times, as well as a quarterly cash dividend of 60 cents a share.