Discover Financial Services reported its financial results for the first quarter of 2025, revealing a net income of $1.1 billion, or $4.25 per diluted share, compared to $851 million, or $3.25 per diluted share, in the same period last year. This represents a 30% increase in net income year-over-year. Total interest income for the quarter was $4.8 billion, a decrease of 3% from $4.9 billion in the prior year, primarily due to a lower average level of loan receivables. However, net interest income increased by 2% to $3.6 billion, driven by a higher yield on loans and lower funding costs.
The company experienced a decline in total loans, which fell by $9.2 billion, or 7%, to $117.4 billion, with credit card loans specifically decreasing by $0.4 billion to $99.0 billion. The provision for credit losses decreased to $1.2 billion from $1.5 billion in the previous year, reflecting improved credit quality in the credit card portfolio. The allowance for credit losses stood at approximately $8.1 billion, down from $8.3 billion at the end of 2024, indicating a release of $215 million driven by seasonal declines in receivables.
In terms of operational metrics, Discover's direct-to-consumer deposits grew by $5.1 billion, or 6%, to $92.4 billion. The company also reported a decrease in the net charge-off rate for credit card loans, which fell to 5.47% from 5.66% in the previous year. Delinquency rates for credit card loans over 30 days past due decreased to 3.66%, down from 3.84% at the end of 2024, indicating improved credit performance.
Strategically, Discover is in the process of merging with Capital One Financial Corporation, with regulatory approval received on April 18, 2025. The merger is expected to close around May 18, 2025, subject to the satisfaction of remaining conditions. The company has paused share repurchases in accordance with the merger agreement. Looking ahead, Discover anticipates continued focus on managing credit risk and maintaining strong liquidity, with a robust liquidity portfolio of $30.2 billion as of March 31, 2025.
About Discover Financial Services
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