Discover’s quarterly net income will likely exceed $600 million in the third quarter of this year, followed by the “kitchen sink” quarter. Forecaster RAM Research predicts Discover’s net income for the first quarter of 2016 will approach $700 million or up 14.8% YOY due to its strong U.S. marketing and international adjustments.
DISCOVER U.S. CREDIT CARD NET INCOME
4Q/13: $602 million
1Q/14: $631 million
2Q/14: $644 million
3Q/14: $644 million
4Q/14: $404 million
1Q/15: $586 million
2Q/15: $598 million
3Q/15: $601 million
4Q/15: $487 million
1Q/16: $673 million
Source: Discover; CardData; RAM Research
Discover’s credit card outstandings continued strong in the first quarter rising 5.1% as Purchase Dollar Volume (PDV) rose 2.7%, year-on-year (YOY). While all other credit card metrics remained stable, overall net income for Q1/15 declined 7.1% YOY to $586 million.
Discover reported credit card outstandings for Q1/15 of $53.5 billion, compared to $56.1 billion for the fourth quarter and $50.9 billion for the year ago quarter.
PDV for the first quarter totaled $26.4 billion, compared to $25.7 billion for Q1/14 and $30.9 billion for Q4/14.
Gross Dollar Volume (GDV) rose 2.1% YOY to $28.7 billion, from $28.1 for Q1/14 and $33.2 billion in the prior quarter.
Delinquency (30+ days) declined to 1.64%, compared to 1.73% in the prior quarter, and 1.72% one-year ago.
Late-stage delinquency (90+ days) increased 1 basis points (bps) from Q4/14 to 0.86%, and down 1 bps from one-year ago.
Discover noted during the first quarter, a payment processing change was implemented which had the effect of contributing favorably to the delinquencies of certain accounts. These changes partially contributed to the decline in the delinquency rate.
Net charge-offs rose to 2.40% from the 2.26% in the prior quarter and from 2.32% in the year ago quarter. The interest yield declined 9 bps from the year ago quarter to 12.05% and down 3 bps from 4Q/14.
For data, background and forecasts on Discover: Search CardWeb.com’s CardFlash® Library of more than 58,000 archived articles; Access CardWeb.com’s CardData® for current and historical Performance, Portfolios, Profiles, etc. Visit RAM Research® (ramresearch.com) for quarterly and annual forecasts covering more than 150 metrics. [complimentary or deeply discounted access to CardWeb.com subscribers].
Additional database resources include CardWeb.com’s CardExecs® – comings & goings of payments movers & shakers; CardWeb.com’s CardWatch® – ears & eyes on marketing globally (57K items); and CardWeb.com’s CardPixes® – form & function of card design (7K items).