Discover Financial Services(DFS)2024-12-23 12:28Net Interest Income and Margin - Net Interest Income increased by 10% to 3.322 billion in Q3 2023[1] - Net Interest Margin improved by 43 basis points to 11.38% in Q3 2024 from 10.95% in Q3 2023[1] - Net Interest Margin improved by 43 bps to 11.38% in Q3 2024, up from 10.95% in Q3 2023[7] - Net Yield on Interest-earning Assets improved by 25 bps to 9.54% in Q3 2024, up from 9.29% in Q3 2023[7] - Interest yield rose to 15.06% in Sep 30, 2024, up 62 basis points (bps) from 14.44% in Sep 30, 2023[8] - Interest yield on personal loans increased by 89 bps YoY to 13.58% for the nine months ended Sep 30, 2024[10] Non-Interest Income and Revenue - Total Non-Interest Income grew by 11% to 722 million in Q3 2023[1] - Total revenue for Q3 2024 increased by 17% year-over-year to 22.569 billion in Q3 2023[3] Credit Losses and Provisions - Provision for Credit Losses decreased by 13% to 1.702 billion in Q3 2023[1] - Allowance for credit losses decreased to 8,665 million in Sep 30, 2023[8] - Provision for credit losses in digital banking decreased by 3.709 billion for the nine months ended Sep 30, 2024[11] Net Income and Earnings Per Share - Net Income rose by 41% to 683 million in Q3 2023[1] - Basic EPS increased by 42% to 2.59 in Q3 2023[1] Operating Efficiency and Expenses - Operating Efficiency worsened by 200 basis points to 38.0% in Q3 2024 from 36.0% in Q3 2023[1] - Total operating expenses for digital banking increased by 5.589 billion for the nine months ended Sep 30, 2024[11] Capital and Equity Metrics - Total common equity increased by 23% year-over-year to 13.180 billion in Q3 2023[5] - Tangible common equity per share rose by 23% year-over-year to 51.69 in Q3 2023[5] - Total risk-based capital ratio improved to 15.0% in Q3 2024, up from 14.1% in Q3 2023[4] - Tier 1 risk-based capital ratio increased to 13.5% in Q3 2024, compared to 12.5% in Q3 2023[4] - Common equity tier 1 capital ratio rose to 12.7% in Q3 2024, up from 11.6% in Q3 2023[4] - Tangible Common Equity (TCE) as of Sep 30, 2024, is 12,925 million in Sep 30, 2023[14] - GAAP Book Value Per Share increased to 56.93 in Sep 30, 2023[14] - Tangible Common Equity Per Share rose to 51.69 in Sep 30, 2023[14] - Total Common Equity grew to 13,180 million in Sep 30, 2023[14] - TCE is a non-GAAP measure representing common equity less goodwill and intangibles, considered a meaningful measure of the company's net asset value[13] Asset and Loan Growth - Net loans grew by 4% year-over-year to 122.676 billion in Q3 2023[3] - Total tangible assets grew by 6% year-over-year to 143.177 billion in Q3 2023[5] - Total Assets increased by 8% to 140.881 billion in Q3 2023[7] - Credit Card Loans grew by 5% to 95.796 billion in Q3 2023[7] - Personal Loans increased by 11% to 9.368 billion in Q3 2023[7] - Other Loans surged by 49% to 4.942 billion in Q3 2023[7] - Total Loans increased by 6% to 120.380 billion in Q3 2023[7] - Total loan receivables increased to 122,676 million in Sep 30, 2023[8] - Credit card loans ending balance reached 97,389 million in Sep 30, 2023[8] - Private student loans decreased by 8.484 billion as of Sep 30, 2024[10] - Personal loans increased by 10.438 billion as of Sep 30, 2024[10] Deposits and Borrowings - Total deposits increased by 6% year-over-year to 143.432 billion in Q3 2023[3] - Total borrowings decreased by 15% year-over-year to 10.889 billion in Q3 2023[3] - Total Interest-bearing Deposits rose by 8% to 99.606 billion in Q3 2023[7] - Certificates of Deposits grew by 30% to 21.473 billion in Q3 2023[7] - Restricted Cash increased by 169% to 238 million in Q3 2023[7] Credit Metrics - Gross principal charge-off rate increased to 5.91% in Sep 30, 2024, up 167 bps from 4.24% in Sep 30, 2023[8] - Delinquency rate (30 or more days) rose to 3.46% in Sep 30, 2024, up 40 bps from 3.06% in Sep 30, 2023[8] - Net principal charge-off dollars for credit card loans increased to 973 million in Sep 30, 2023[8] - Reserve rate for credit card loans rose to 7.55% in Sep 30, 2024, up 29 bps from 7.26% in Sep 30, 2023[8] - Net principal charge-off rate for personal loans increased by 170 bps YoY to 4.00% for the nine months ended Sep 30, 2024[10] - Delinquency Rate (30 or more days) and Gross Principal Charge-off Rate are key credit metrics, calculated based on loans delinquent and charge-off dollars[12] Digital Banking and Payment Services - Net interest income for digital banking grew by 10.666 billion for the nine months ended Sep 30, 2024[11] - Total payment services network volume increased by 462.377 billion for the nine months ended Sep 30, 2024[11] - PULSE Network volume grew by 243.395 billion for the nine months ended Sep 30, 2024[11] - Discover Network transactions processed decreased by 19 million (1%) YoY to 2.773 billion for the nine months ended Sep 30, 2024[11] Stock and Shareholder Metrics - Common Stock Price rose by 62% to 86.63 at the end of Q3 2023[1] - Book Value per Share increased by 21% to 56.93 in Q3 2023[1] - GAAP Book Value Per Share increased to 56.93 in Sep 30, 2023[14] - Tangible Common Equity Per Share rose to 51.69 in Sep 30, 2023[14] - Preferred Stock adjustments were consistent, with a slight decrease from 4.20 in Sep 30, 2024[14] Regulatory and Non-GAAP Measures - Regulatory Capital Ratios, including Total Risk Based Capital Ratio and Tier 1 Capital Ratio, are preliminary and based on risk-weighted assets[12] - TCE is a non-GAAP measure representing common equity less goodwill and intangibles, considered a meaningful measure of the company's net asset value[13] Other Financial Metrics - Total Liquidity details were not fully disclosed in the balance sheet summary[2] - Goodwill remained constant at 53,380 million in Sep 30, 2024, down 3% year-over-year from 56,593 million in Sep 30, 2024, down 4% year-over-year from $58,965 million in Sep 30, 2023[8]