Morgan Stanley reported this morning that its Discover unit posted a record $479 million in pre-tax profits for the quarter ending February 28th, a 35% gain over the year-ago quarter. Gains on securitizations and lower loan loss provisions in the wake of the fall bankruptcy losses were key drivers for the quarter. Discover also posted record gross dollar volume of $26.8 billion, a 3% gain over the prior year quarter. Purchase dollar volume rose 8% over 1Q/05. Managed merchant, cardholder and other fees were $519 million for 1Q/06, up 8% from a year ago. Managed outstandings were flat to year-ago levels, however, U.S. managed outstandings declined from $45.1 billion one-year ago to $43.6 billion. During the quarter Discover purchased $1.4 billion in card outstandings from Goldfish in the U.K. The managed credit card net charge-off rate for the first quarter was 5.06%, 5 basis points lower than a year ago. The managed credit card over-30-day delinquency rate was 3.45%, a decrease of 79 basis points from the first quarter of 2005 and the managed credit card over-90-day delinquency rate was 1.61%, 44 basis points lower than a year ago. The account base increased during the first quarter by approximately 600,000 accounts from the fourth quarter but includes the addition of 1.1 million Goldfish accounts. Active accounts rose slightly from 1Q/05 to 19.6 million. For complete details on Discover’s first quarter performance, visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
1Q/05* 2Q/05* 3Q/05* 4Q/05 1Q/06 Y/Y CHNG
Outstandings: $47.8b $46.8b $47.1b $46.9b $47.8 NC
Volume: $25.9b $25.4b $26.7b $26.1b $26.8 +3%
Accounts: 46.0m 45.9m 45.6m 45.5m 46.1 NC
Actives: 19.5m 19.3m 19.2m 19.2m 19.6 +1%
Chargeoffs: 5.11% 4.94% 5.12% 5.76% 5.06 -5bps
Delinquency**: 4.24% 3.90% 3.91% 3.98% 3.45 -79bps
Yield: 11.23% 11.69% 12.04% 11.94% 12.13 +90bps
Notes: * 1Q/05 ended 2/28/05; 2Q/05 ended 5/31/05; 3Q/05 ended 8/31/05;
4Q/05 ended 11/30/05. 1Q/06 ended 2/28/06** delinquency is 30-90 days
and excludes 90+ days. Includes both domestic and international cards.
Source: CardData (www.carddata.com)