DFS Discover Financial Services

By Josh Beckerman 

Discover Financial Services said total loans rose 4% to $71.9 billion in the second quarter, reflecting growth in credit-card lending as well as other categories such as student loans.

Profit rose 3% to $616 million, a figure that included a nonrecurring tax benefit of $44 million.

Earnings per share rose to $1.47, including a tax benefit of 11 cents, from $1.33 a year earlier. Analysts polled by Thomson Reuters had projected $1.42. Such estimates typically exclude nonrecurring items.

Revenue net of interest expense increased 2% to $2.22 billion. Analysts expected $2.23 billion.

Shares fell 2.6% cents to $55.50 in after-hours trading.

In January, Chief Executive David Nelms set a target to increase total loans by between 4% and 6% in 2016.

The company said Tuesday that credit-card loans grew 4% to $57.2 billion, while Discover card sales volume rose 2%. Personal loans increased 10%, while private student loans increased 15%, excluding purchased student loans.

Discover's debit-card network, called Pulse, had a 14% decline in transaction dollar volume.

Shares of Discover and other card companies fell when store-card issuer Synchrony Financial increased its credit-loss forecast on June 14. Last Friday, Discover said its delinquency rate in June was 1.6%, flat with a year ago.

On June 29, Discover said the Federal Reserve had no objections to its capital plan, which includes a dividend increase to 30 cents from 28 cents and up to $1.95 billion of stock buybacks through June 2017.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

July 19, 2016 18:04 ET (22:04 GMT)

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