Discover: Affirming 8.5%-9% Charge-Off Rate In Fiscal 4Q
10 Novembre 2009 - 9:26PM
Dow Jones News
Discover Financial Services (DFS) repeated its warning Tuesday
that losses from souring card accounts would rise in the fourth
quarter.
The company expects the charge-off rate, or card loans that the
company doesn't expect to collect on, to be between 8.5% and 9% in
the fourth quarter, up from 8.4% in the fiscal third quarter.
The rise in charge-offs indicates the company has "not yet
reached the peak," David Nelms, Discover's chairman and chief
executive, said Tuesday during a Webcast of the Bank of America
Merrill Lynch Banking and Financial Services Conference.
Discover is "expecting a modest increase in charge-offs," in the
fourth quarter said Nelms, and hopes the charge-off rate will peak
in the "fairly near future."
Unlike most other card companies, which either issue plastic or
process the transactions, Discover and bigger rival American
Express Co. (AXP) do both. Therefore, in addition to the interest
Discover earns on its credit-card loans, a chunk of its revenue
comes from fees it charges banks and merchants, such as grocery
stores or gas stations, to process card payments.
-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729;
aparajita.saha-bubna@dowjones.com
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