Discover reported net income of $649 million for its fiscal 3Q/11, way up from the year ago figure of $261 million while sales volume totaled $26.3 billion, up 9% from the prior year. Total loans for the quarter grew 8% from the prior year to $54.1 billion and were up 3% from the prior quarter, with credit card loans up 2% from the prior year and 3% from the prior quarter. Meanwhile, the delinquency rate for credit card loans over 30 days past due dropped to a record low of 2.43% while the credit card net charge-off rate declined to 3.85%.
The Discover delinquency rate for credit card loans over 30 days past due is reflective of industry declines for issuers across the board, which is now 52% below the peak, 18-month ago level of 4.50%, having dropped from the prior quarter to another all-time low of 2.43%, an improvement of 196 basis points from the prior year, and 36 basis points from the prior quarter. Industry indications also show early stage delinquencies dropped 32 bps to 3.02%. The Discover credit card net charge-off rate, however, posted a negative correlation with industry figures, having dropped to 3.85% for the quarter, down 388 basis points from the prior year and 116 basis points from the prior quarter. However, industry-wide defaults in August were up eight bps from July to sit at 6.41%, ending a four-month plummet, while current chargeoff levels are 35% lower since the year ago period and nearing the 6% historical average (CardFlash Library, 2011-09-13, 2011-06-24).