Discover Financial: Not Yet There On Repaying TARP Funds
17 Settembre 2009 - 6:23PM
Dow Jones News
Discover Financial Services Inc. (DFS) isn't yet repaying the
government's investment in the company, chief executive David Nelms
said Thursday.
"We do have a process we go through with regulators and the
board" before the federal funds may be repaid, Nelms said during a
Webcast of a discussion of the company's fiscal third-quarter
results announced earlier Thursday.
While Discover is "feeling increasingly positive" about its
ability to successfully sell stock and tap the debt markets in the
most recent quarter, it has yet to go through the process that will
pave the way for repaying the government, Nelms said.
Investors have taken comfort from Discover's transformation into
a bank-holding company. With that status, Discover has participated
in government-led efforts aimed at stabilizing the industry.
The company got $1.2 billion in March from the U.S. Treasury's
Troubled Asset Relief Program in exchange for a stake in the
company.
In July, at the time Discover commenced its $534 million stock
offering, the company said it may use a portion of the funds to
repay the government.
For the quarter ended Aug. 31, Discover posted net income of
$577.5 million, or $1.07 a share, up from $180.1 million, or 37
cents a share, a year earlier.
The latest results include an after-tax gain of $287 million
related to an antitrust settlement. The company will get another
payment related to this settlement.
The company's shares recently traded at $16.04, up 72 cents, or
4.70%. The stock is within striking distance of its 52-week high of
$17.70, reached last September.
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