Tuesday, March 22, 2011 5:29:42 PM
03/21/2011
Tue Mar 22, 2011 5:12pm EDT
* Raises quarterly dividend to 6 cents from 2 cents
* Q1 EPS 84 cents vs year-ago 22-cent loss
* Loan losses fall, consumer spending rises
* Shares up 2 percent after-hours (Adds CEO comment, detail on reserve release and consumer spending; updates shares)
By Maria Aspan
NEW YORK, March 22 (Reuters) - Discover Financial Services (DFS.N) reported a $465 million quarterly profit, recovering from a year-earlier loss, and raised its quarterly dividend, as losses on bad loans fell and its customers spent more.
The credit card lender and processing network earned 84 cents per share in its fiscal first quarter, ended February 28. That compared with a year-ago loss of $104 million, or 22 cents per share.
Discover also declared a first-quarter dividend of 6 cents per share, up from the 2 cents it has paid over the past two years and back to the level it paid before the financial crisis.
Like other credit card lenders, Discover has seen losses on bad loans gradually drop from the highs of the crisis. Its net charge-off rate for the quarter fell to 5.96 percent, and the company released $271 million in loan-loss reserves.
Chief Executive David Nelms attributed the company's results to "on-going improvements in credit performance and accelerating growth in Discover card sales," according to the earnings release.
The company said Discover card sales volume was $24 billion during the quarter, a 7 percent increase from a year earlier.
The company's shares closed down 1.7 percent at $22.25 on Tuesday, and rose about 2 percent in after-hours trading. They have risen more than 20 percent this year, and on Monday hit their highest point since October 2007, a few months after Morgan Stanley (MS.N) spun Discover off into a separate company. (Reporting by Maria Aspan; Editing by Steve Orlofsky)
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http://www.reuters.com/article/2011/03/22/discover-idUSN2216402120110322
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