Discover Financial Services (NYSE:DFS) stock rose 1.43% (As on October 17, 11:20:30 AM UTC-4, Source: Google Finance) after the company reported better-than-expected third quarter results, driven by increased net interest margin and modest loan growth. Total loans ended the quarter at $127.0 billion, up 4% year-over-year, down 1% sequentially. Credit card loans ended the quarter at $100.5 billion, up 3% year-over-year. Personal loans increased $879 million, or 9%. Private student loans were down 19% driven by the first closing of the private student loan portfolio sale. Net interest income for the quarter increased $333 million, or 10% year-over-year, driven by higher average receivables and net interest margin expansion. Net interest margin was 11.38%, up 43 basis points versus the prior year. Non-interest income increased $77 million, or 13% from the prior year period reflecting a $70 million gain from the loan sale. The total net charge-off rate was 4.86%, up 134 basis points from the prior year period and up 3 basis points from the prior quarter reflecting continued seasoning of recent vintages and the student loan accounting classification change.  Provision for credit losses of $1.5 billion decreased $229 million from the prior year quarter driven by a $570 million lower reserve build, partially offset by a $372 million increase in net charge-offs.

Further, Payment Services pretax income of $84 million was largely flat year-over-year. Payment Services volume was $100.5 billion, up 9% from the prior year period. Discover Network volume was down 4% reflecting a slowdown in Discover card sales volume. PULSE dollar volume was up 14% driven by increased debit transaction volume. Diners Club volume was up 7% year-over-year reflecting strength across most regions and Network Partners volume decreased 24% from the prior year due to lower AribaPay volume.

DFS in the third quarter of FY 24 has reported the adjusted earnings per share of $3.69, beating the analysts’ estimates for the adjusted earnings per share of $3.45. The company had reported the adjusted revenue of $4.45 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $4.35 billion. Total operating expenses were up $238 million year-over-year, or 17%.

Discover’s Board of Directors declared a quarterly cash dividend of $0.70 per share, payable on December 5, 2024, to holders of record at the close of business on November 21, 2024.