Core Insights - Discover Financial Services (DFS) reported strong fourth-quarter 2024 results, with adjusted earnings per share of $5.11, significantly exceeding the Zacks Consensus Estimate of $3.17 and more than tripling year over year [1][6] - The company's revenues, net of interest expenses, increased by 13.9% year over year to $4.8 billion, surpassing the consensus mark by 8.4% [2][3] Financial Performance - Interest income rose to $5 billion, a 2% increase year over year, while interest expense decreased by 3% to $1.4 billion [4] - Non-interest income surged by 59% year over year to $1.1 billion, beating the Zacks Consensus Estimate by 29.5% [4] - Total operating expenses increased by 4% year over year to $1.9 billion, driven by higher employee compensation and professional fees [5] Segment Performance - The Digital Banking segment reported a pretax income of $1.6 billion, nearly four times higher year over year, attributed to lower provisions for credit losses and growing revenues [7] - Total loans decreased by 4% year over year to $120.8 billion, with personal loans growing by 7% and credit card loans improving by 1% [8] - The Payment Services segment's pretax income was $74 million, up from $54 million in the prior year, but missed the consensus estimate [9] Financial Position - As of December 31, 2024, total assets were $147.6 billion, down from $151.7 billion at the end of 2023, while total equity rose to $17.9 billion [11][12] - Borrowings decreased from $21.3 billion at the end of 2023 to $16.3 billion [12] Capital Deployment and Guidance - The company has paused share repurchases due to a merger agreement with Capital One Financial Corporation valued at $35.3 billion [13] - Management expects loan growth to follow pre-pandemic trends and net interest margin to remain consistent with the fourth quarter level of 11.96% [14]
Discover Financial's Q4 Earnings Beat on Strong Net Interest Margin