Favorable trends in its flagship credit card business helped Discover Financial Services (DFS) post solid results in the third quarter.
The Riverwoods, Ill., bank reported net income of $593 million, or $1.20 per diluted share. That was slightly better than the $1.19 consensus expectation of analysts surveyed by Bloomberg.
Earnings were down slightly from the third quarter of 2012, when the company reported net income of $1.24 per share. Last quarter, Discover earned $1.19 per share.
Discover's third-quarter results were aided by 4% growth in credit card loans, as compared to the third quarter of 2012, and a falling credit card chargeoff rate.
"Discover's card loan growth continues to exceed industry growth, while chargeoffs achieved new record lows," chief executive officer David Nelms said in a press release.
While chargeoffs of credit card loans fell, the percentage of loans in Discover's private student loan portfolio that were written off rose in comparison to the third quarter of last year. The company attributed the increase to a larger percentage of its private student loans entering the repayment period.
Overall, Discover's net interest margin was 9.65%, up 26 basis points from the third quarter of last year.
Discover's third quarter results this year cover July 1 to Sept. 30 following a change in the company's fiscal year. Last year the third quarter covered June 1 to Aug. 31.
