Discover Financial Services posted a 33% drop in third-quarter profit as write-offs climbed and the firm set aside more money to cover future loan losses.
(Bloomberg) — Discover Financial Services posted a 33% drop in third-quarter profit as write-offs climbed and the firm set aside more money to cover future loan losses.
Net income totaled $683 million, or $2.59 a share, the Riverwoods, Illinois-based credit-card lender said Wednesday in a statement. That missed the $3.17 average estimate of analysts surveyed by Bloomberg.
Discover, led by interim Chief Executive Officer John Owen, said net write-offs rose to 3.52% from 1.71% in last year’s third quarter. Provision for credit losses more than doubled to $1.7 billion.
Owen took over for Roger Hochschild, who resigned in August following compliance and risk-management lapses that prompted the lender to pause stock buybacks for the second time in a year. The firm has been in discussions with regulators over how it misclassified some of its credit cards, which resulted in some merchants being overcharged. Discover also received a proposed consent order the Federal Deposit Insurance Corp. tied to a consumer compliance matter.
In August, Discover said it hired 200 workers to focus on improving compliance.
Shares of Discover slid 2% to $90 in extended trading at 4:42 p.m. in New York. The stock had dropped 6.1% this year through the close of regular trading.
Read more: Discover Said to Mull Possible Sale of Its Student-Loan Arm
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