Discover Reports 12 Percent Rise in Profits in Fiscal 2Q

Card issuer and payments network Discover Financial Services (NYSE: DFS) today reported fiscal second quarter net income rose 12 percent to $234 million, or $.48 per share, compared with $209 million, or $.44 per share, in the second quarter of 2007. Revenue net of interest expense totaled $1.14 billion, down from $1.16 billion in the fiscal second quarter of 2007.

Managed credit card receivables grew 2 percent to $47.8 billion, and purchases on Discover cards grew 2 percent to $22.5 billion.

The card delinquency rate, or ratio of credit card accounts more than 30 days past due, grew to 3.85 percent, up 34 percent from 2.97 percent in fiscal second quarter of 2007. The net charge off rate rose 27 percent to 5.05 percent. Discover increased its provision for loan losses 31 percent to $582 million.

Discover’s Third-Party Payments division saw record transaction volume of $29.4 billion, up 33 percent from last year, due to signing deals with new card issuers and an increase in volume from existing issuers. Discover’s networks processed 1.07 billion transactions in the quarter, up from 920 million a year ago.

During the quarter, Discover completed the sale of the Goldfish business in the United Kingdom and agreed to acquire Diners Club International, with an expected closing in July.