Discover Financial Services boosted its second-quarter profits, to $602 million or $1.20 a share, as the Riverwoods-based company saw growth in its online bank and fewer delinquencies on its credit cards, got more use out of its loans and its plastic and repurchased shares.
Discover’s results exceeded Wall Street’s expectations. The average estimate of 23 analysts surveyed by Bloomberg News was $1.15 a share. Results were disclosed after the market closed.
Discover shares are up 32 percent this year, while the 81-company Standard & Poor’s 500 Financials Index is up 27 percent.
In the period last year, Discover earned $525 million or 99 cents a share.
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Discover also disclosed that, in the second quarter, it repurchased 7 million common shares for $340 million. The number of shares outstanding are down 1 percent. It has also increased its dividend.
“Discover’s strong overall results were driven by profitable growth in direct banking and continued improvement in credit,” Discover Chief Executive David Nelms said in a statement.
Credit card loan delinquencies of more than 30 days past due reached a record low of 1.58 percent, Discover said.
Discover’s return on equity was 23 percent, down from 24 percent a year earlier.
Its operating expenses in the second quarter were $820 million, up from $758 million a year earlier. Employee compensation was up due to the addition of a mortgage business. And marketing expenses also were up due to an increase in credit-card marketing and the addition of the mortgage business.
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