Discover's Card Charge-Offs Improve and Delinquencies Show Stability

Core Insights - Discover Financial Services reported improving credit quality metrics related to credit cards, with an outlook for loan growth and a stable consumer environment [1] - The company experienced a 7% year-over-year increase in PULSE volumes, reaching $84.9 billion, driven by growth in debit card usage [1] Loan and Credit Metrics - Card receivables increased by 1%, with ending loan balances in the card loan portfolio at $102.8 billion as of the fourth quarter [2] - The net charge-off rate on card loans decreased to 5%, down from 5.3% in the previous quarter, indicating a positive trend in credit quality [3] - Overall charge-off ratio was 4.6%, which is 0.53% higher than last year but down 0.22% from the third quarter [6] Consumer Outlook - The CFO noted strong holiday sales and an opportunity for increased new account acquisition, which is expected to modestly boost sales in 2025 and more significantly in 2026 [4] - The company maintains a stable view on the consumer, supported by wage growth and a resilient labor market, which is expected to positively impact sales and credit into 2025 [7] Deposits and Funding - Average consumer deposits grew by 10% year-over-year, totaling $89.2 billion, with direct-to-consumer deposits now accounting for 72% of total company funding [5]