Creditnet News Story
Discover posts second-quarter profit behind spending increases
Thursday, June 24, 2010
By Thomas Astery
Credit card giant Discover returned to profitability in the second quarter of 2010 thanks to a sizeable jump in consumer credit card spending.
Discover Financial Services said it had a net income of $184.6 million for the three-month period that ended on May 31, exceeding expert forecasts. Discover said that it posted a net loss of $148.9 million for the same quarter last year.
The reason for the profit was a 6 percent surge in credit card sales, which topped $23 billion in the three-month period, the company's report said. This is a sign that consumers are gaining confidence in their own financial situations as well as the economy. The company said it believes the improvement in consumer credit will drive earnings further upward.
Discover said its charge off rate was just 7.97 percent, down from 8.51 percent the previous quarter.
A recent AP report said that several other competitors, like Citigroup, Capital One and JPMorgan Chase all had higher charge off rates in May than the one Discover reported.
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