Discover saw its stock get slammed on Wednesday (Jan. 27) amid an earnings report that saw top line performance in line with estimates but with a miss in earnings per share.
The company said that it earned $1.14 per share in the most recent quarter, which was up from last year’s $0.87. But the most impact came as the bottom line came in shy of Wall Street expectations, which had been pegged at $1.30. Shares fell by more than 7 percent in the aftermarket.
The reliance on credit card growth comes even as that growth is slowing — so much so that there are other places the company must look for tailwinds. But, in the meantime, the credit card is dominant, accounting for 89 percent of the assets that are on the books. Student and personal loan activity were up in the period. Loans via credit card were up more than 3 percent to $56 billion in the period.
Discover is looking to get balance transfer promotions down, while its near-term focus will be tied to prime borrowers, as the firm readies the launch of secured credit cards.
All types of loans saw growth year over year. Total loans were up 3.5 percent year over year to $72 billion. Personal loans were up nearly 10 percent.
The company said that it had seen the impact of lower gas prices.
Turning to payments, the results and commentary were mixed, as volume growth was up but the third-party segment had been hit, according to management, on dealing with PULSE and the “challenging post-Durbin environment.”
In other metrics, total net chargeoff rates were down a few basis points.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More