Discover Financial Services (NYSE:DFS) stock fell 0.45% (As on Jan 20, 11:26:27 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the fourth quarter of FY 21. The company has reported net income of $1.1 billion for the fourth quarter of 2021, as compared to a net income of $799 million for the fourth quarter of 2020. Digital Banking pretax income of $1.5 billion for the quarter was $467 million higher than the prior year period reflecting a lower provision for credit losses and higher revenue net of interest expense, partially offset by higher operating expenses. Total loans ended the quarter at $93.7 billion, up 4% year-over-year, and up 5% sequentially. Credit card loans ended the quarter at $74.4 billion, up 4% year-over-year. Personal loans decreased $241 million, or 3%, and private student loans increased $159 million, or 2%, year-over-year. The organic student loan portfolio, which excludes purchased loans, increased $378 million, or 4% from the prior year period.

Net interest income for the quarter increased $106 million, or 4%, from the prior year period, driven by higher average receivables, favorable funding costs and lower interest charge-offs. Net interest margin was 10.81%, up 18 basis points versus the prior year. Card yield was 12.50%, down 15 basis points from the prior year period primarily driven by the impact of a high payment rate on revolving loan balances and a higher mix of receivables at a promotional rate, partially offset by decreased interest charge-offs. Payment Services had a pretax loss of $97 million, down $121 million year-over-year. Lower revenue was driven by a $139 million unrealized loss on equity investments. This was partially offset by higher PULSE and Network Partners revenue. Payment Services volume was $83.4 billion, up 19% year-over-year. PULSE dollar volume was up 18% year-over-year with growth across all debit products driven by increased spend related to the economic recovery. Diners Club volume was up 17% year-over-year reflecting a rebound from the impacts of the pandemic. Network Partners volume increased 29% from the prior year primarily reflecting higher AribaPay volume.

DFS in the fourth quarter of FY 21 has reported the adjusted earnings per share of $3.64, missing the analysts’ estimates for the adjusted earnings per share of $3.72, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 4 percent to $2.94 billion in the fourth quarter of FY 21, missing the analysts’ estimates for revenue of $3 billion.