By Andrew R. Johnson
Discover Financial Services (DFS), the sixth-largest U.S.
credit-card lender, wrote off less credit-card debt in January
while its delinquency rate remained near a historic low.
The company's net charge-off rate, or percentage of loans deemed
uncollectible, fell to 2.2% in January from 2.5% in December. The
rate was 2.9% a year earlier.
Its customers continued to pay their bills on time, as its
delinquency rate was 1.8%, unchanged from December and down from
2.3% a year earlier.
The Riverwoods, Ill.-based company, which has ventured beyond
credit cards in recent years by adding student lending, personal
loans and mortgages, disclosed the performance in a filing with the
U.S. Securities and Exchange Commission on Monday.
Discover's shares were inactive in early trading on Monday
though its shares are up more than 41% over the last year through
Friday's close of $39.88. The company has had one of the best
performing stocks over the last year as its credit-card loan
portfolio has grown consistently while larger card issuers have
struggled to grow their portfolios.
The company's card loans totaled $49.9 billion at the end of
January, down from $51.1 billion in December but up from $47.2
billion a year earlier.
Credit quality has remained strong for most players in the
industry as consumers have cautiously taken on new debt and worked
to pay their bills on time since the recession. However, industry
executives and analysts expect delinquency and net charge-off rates
to gradually edge back this year given there is little room for
further improvement.
"At some point you do need to see losses go up," Roger
Hochschild, president and chief operating officer of Discover, said
Monday during a presentation to investors. "I don't think where we
are now is a new normal."
Fitch Ratings said last week that U.S. credit card delinquencies
tied to securitized loans ended last year at 1.63%, the lowest
level it has recorded since launching its Prime Credit Card Index
in 1991.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires