Discover Financial Profit Misses Expectations
January 27 2016 - 5:30PM
Dow Jones News
Discover Financial Services Inc. on Wednesday posted
weaker-than-expected profit growth in its fourth quarter amid soft
growth in its credit card business.
Shares fell 2.2% to $47.64 a share in after-hours trading.
Riverwoods, Ill.-based Discover said it posted strong student
and personal loan originations in the quarter, but credit card loan
growth was at the low end of its target.
Credit-card loans grew 3.1% to $57.9 billion
Chief Executive David Nelms described the growth as "slower than
we'd like" and said Discover is working to accelerate its credit
card loans in 2016.
In all, the company earned $500 million, up from $404 million in
the year-earlier period. On a per-share basis, earnings rose to
$1.14 a share from 87 cents a share. But analysts polled by Thomson
Reuters had projected earnings of $1.30 a share.
Like American Express Co., Discover both issues credit cards and
operates its own payment network. In addition, Discover has been
expanding aggressively in other loan products, such as student and
personal loans.
Personal loans rose 9.6% and private student loans increased 16%
excluding purchased loans.
Overall, loans were up 3.5% to $72.4 billion
Sales volume on Discover credit cards grew 2.6%, or 5% excluding
the impact of lower gas prices.
Revenue net of interest expense edged up to $2.21 billion from
$2.04 billion. Analysts had projected revenue of $2.22 billion.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 27, 2016 17:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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