Investing.com -- Discover Financial Services reported mixed first-quarter results Wednesday as earnings missed, but revenue beat analyst forecasts.
Discover Financial Services (NYSE:DFS) rose slightly by 1.7% in premarket trade Thursday.
For the quarter ended Mar. 31, Discover Financial Services announced earnings of $1.10 per share on revenue of $4.21 billion. Analysts polled by Investing.com anticipated EPS of $2.95 on revenue of $4.07B.
Total Discover card volume was $53.24B, down from $54.13B a year earlier.
The net charge-off rate, a measure of loan portfolio performance, rose 220 basis points to 4.92% versus the prior year period, driven "by continued seasoning of recent vintages with higher delinquency trends," the company said. A higher net charge-off rate typically signals that a lender is experiencing a higher level of loan losses.
The company set aside more cash for bad loans, or increased its provisions for credit losses to $1.50B from $1.10B a year earlier.
The quarterly results come as the company looks to wrap up its $35B merger with Capital One later this year or early next year.
In their note covering the report, Goldman Sachs analysts said they will be looking for several key insights on the earnings call, including “greater details on its 2024 outlook, where it now expects slightly better loan growth and tightened the high-end of its credit guidance.”
In addition, the analysts are also awaiting further details on what drove the $799 million charge the company took related to the card misclassification remediation reserve, more on the company’s credit outlook, and “any updates regarding the timing of the pending merger with Capital One.”
(Yasin Ebrahim contributed reporting)