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Discover Financial Services Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Other income increased due to the successful student loan exit.
- Net discount interchange revenue was up $45 million due to increased cashback debit volume and lower rewards.
- Personal loans were up 5% YoY.
- Total loans, after adjusting for the student loan sale, increased by 3%.
- Card receivables increased by 1% YoY due to a slightly lower payment rate, partially offset by a decrease in sales volume.
- Discover card sales were down 3% YoY.
- Total operating expenses were up by $67 million or 4% YoY.
- Compensation costs increased by $146 million or 23%, due to higher wages and benefits, and proactive employee retention actions.
- The rewards rate was 135 basis points in the period, a decrease of 2 basis points, driven by lower cashback match.
- Loan growth is expected to align with pre-pandemic norms.
- Net interest margin is expected to remain relatively consistent with Q4 level, but an increase in new account generation may create some margin pressure in the back half of the year.
- The company will not provide numerical guidance due to the pending merger.
