Morgan Stanley reported yesterday that profits for its Credit Services or Discover card division grew 7% during the third quarter to $210 million. While the portfolio, based on outstandings and accounts, has been flat, Discover’s delinquency rate has showed a significant improvement, down by more than 9% compared to 3Q/01. The interest rate spread widened 80 basis points over the past year, driven by a decline in cost of funds. The over-30-day delinquency rate improved 59 basis points to 5.72%, and the over-90-day delinquency rate was 2.49%, the lowest level in the last seven quarters. Meanwhile, merchant and cardholder fees rose 1% to $547 million due to higher merchant transaction volume and late fees. Transaction volume rose 4.3% from a year ago to $24.3 billion. During the third quarter Discover added no net new accounts and active accounts declined by 600,000. For complete details on Morgan Stanley/Discover’s third quarter performance visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
3Q/01* 4Q/01* 1Q/02* 2Q/02* 3Q/02 Y/Y CHNG
Receivables: $49.7b $49.3b $49.6b $49.4b $49.7b NC
Volume: $23.3b $22.1b $24.1b $23.5b $24.3b +4.3%
Accounts: 45.4m 45.7m 46.0m 46.2m 46.2m +3.4%
Actives: 24.0m 24.0m 23.8m 23.4m 22.8m +1.8%
Chargeoffs: 5.79% 5.85% 6.49% 6.30% 6.27% +8.3%
Delinquency: 6.31% 6.85% 6.75% 5.63% 5.72% -9.4%
Yield: 3.34% 13.48% 12.63% 12.64% 12.71% -4.7%
2Q/01 fiscal quarter ended 5/31/01; 3Q/01 fiscal quarter ended 8/31/01;
4Q/01 fiscal quarter ended 11/30/01; 1Q/02 ended 2/28/02; 2Q/02 ended 5/31/02;
3Q/02 ended 8/31/02.
Source: CardData (www.carddata.com)