Discover Financial Q1 Profit Beats Estimates

reported better-than-expected earnings for the first quarter. The Riverwoods, Illinois-based company posted quarterly earnings of $586 million, or $1.28 per share, compared to $631 million, or $1.31 per share, in the year-ago period. Its revenue surged to $2.17 billion from $2.08 billion. However, analysts were expecting a profit of $1.27 per share on revenue of $2.17 billion. Its net interest income increased to $1.63 billion from $1.56 billion, while net interest margin shrank by 0.18 percentage points to 9.7 percent. Direct Banking pretax income slipped 11 percent to $881 million in the quarter, while Payment Services pretax income declined $1 million from the year-ago quarter to $27 million . Total loans increased 5.9 percent to $67.6 billion in the first quarter. Credit card loans rose 5.1 percent to $53.5 billion, while Discover card sales volume surged 2.7 percent year-over-year. Its return on equity came in at 21 percent for the first quarter. During the quarter, Discover Financial repurchased around 6 million shares of common stock for $360 million. The average estimate among 28 Estimize users was for earnings of $1.28 per share and revenue of $1.94 billion. "We achieved solid loan growth and recently launched our new Discover it Miles card leveraging our strengths in rewards and service," said David Nelms, chairman and CEO of Discover. "We continue to generate a strong return on equity and announced plans to increase share repurchases and dividends." Discover Financial shares fell 1.28 percent to $58.50 in the after-hours trading session.