Discover continues to outpace the four top Visa and MasterCard issuers with solid growth in third quarter outstandings. However, Discover’s gross dollar volume (GDV) rose 5.9% to $31.7 billion, below the Big 4 Visa and MasterCard issuers.
Discover’s U.S. end-of-period (EOP) credit card loans grew 6.5% year-on-year (Y/Y) to $53.7 billion, compared to $52.7 billion in the prior quarter (Q2/14) and $50.4 billion in year ago quarter (Q3/13). The fastest growing Visa and MasterCard issuer is Capital One, posting a 4.6% third quarter Y/Y gain.
Discover’s GDV rose 5.9% to $32.1 billion, compared to $31.7 billion in Q2/14 and $30.3 billion in Q3/13. Purchase dollar volume (PDV) rose 5.7% to $29.6 billion, compared to $29.3 billion in prior quarter and $28.0 billion in the year ago quarter.
Discover’s credit card delinquency rate (30 + days) rose to 1.71% from 1.67% for Q3/13, and up sequentially by eight basis points (bps). Late stage delinquency (90+ days) increased slightly Y/Y at 82 basis points, up two bps from the prior quarter and four bps from the year ago quarter.
Charge-offs declined 17 bps compared to the prior quarter but up 11 bps from the year ago quarter. For Q3/14 charge-offs (net principal) stood at 2.16%, compared to 2.33% for Q2/14 and 2.05% for Q3/13.
Discover’s interest yield for its U.S. credit card business decreased to 12.04% for the third quarter, compared to 12.10% in the prior quarter and 12.0% for Q3/13.
Discover Financial Services reported net income of $644 million for the third quarter of 2014, as compared to $593 million for the third quarter of 2013.
Payment Services pretax income was $28 million in the quarter, flat to the prior year. Payment Services dollar volume was $49.6 billion for the third quarter of 2014, up 2% from the prior year. PULSE transaction dollar volume was up 3% year-over-year.
RAM Research projects Discover’s credit card outstandings will slightly top $56 billion in the fourth quarter.
For more data on Discover access CardData®. For information and commentary on Discover visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAM Research® forecasts on Discover are available exclusively through CardWeb.com.®
Delinquency Rate (Over 30 Days) represents loans delinquent over thirty days divided by ending loans (total or respective loans, as appropriate).
Delinquency Rate (Over 90 Days) represents loans delinquent over ninety days divided by ending loans (total or respective loans, as appropriate).
Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period.
Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period.