Discover Financial Services (NYSE:DFS) stock fell 9.50% (As on July 21, 11:42:02 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the second quarter of FY 22. Discover Financial Services has reported net income of $1.1 billion for the second quarter of 2022, as compared to a net income of $1.7 billion for the second quarter of 2021. DFS in the second quarter of FY 22 has reported the adjusted earnings per share of $3.96, beating the analysts’ estimates for the adjusted earnings per share of $3.76. The company had reported the adjusted revenue of $3.22 billion in the second quarter of FY 22, beating the analysts’ estimates for revenue of $3.18 billion.

Moreover, Digital Banking pretax income of $1.4 billion for the quarter was $98 million lower than the prior year period reflecting a higher provision for credit losses and higher operating expenses, mostly offset by increased revenue net of interest expense. Total loans ended the quarter at $99.3 billion, up 13% year-over-year, and up 6% sequentially. Credit card loans ended the quarter at $79.2 billion, up 15% year-over-year. Personal loans increased $280 million, or 4%, and private student loans increased $210 million, or 2%, year-over-year. The organic student loan portfolio, which excludes purchased loans, increased 4% from the prior year period. Net interest income for the quarter increased $311 million, or 14% driven by higher average receivables and net interest margin expansion. Net interest margin was 10.94%, up 26 basis points versus the prior year. Card yield was 12.81%, up 29 basis points from the prior year primarily driven by higher market rates and lower interest charge-offs partially offset by a higher mix of receivables at a promotional rate. Payment Services pretax income of $20 million was down $672 million year-over-year. Lower revenue was driven by a $729 million gain on an equity investment in the prior year compared to $42 million net losses on equity investments in the current year quarter. This was partially offset by higher PULSE and Network Partners revenue. Payment Services volume was $82.9 billion, up 6% year-over-year. PULSE dollar volume was flat year-over-year primarily driven by receding spend on debit products related to the end of federal stimulus programs. Diners Club volume was up 37% year-over-year reflecting an improvement in global travel and entertainment spending. Network Partners volume increased 22% from the prior year primarily reflecting higher AribaPay volume.