Discover Financial Services (NYSE:DFS) stock fell 2.14% (As on January 19, 11:14:37 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 22. The bank also boosted its provision for credit losses compared to the prior year, potentially signaling that it sees a weaker economy ahead. DFS has reported net income of $1.0 billion for the fourth quarter of 2022, as compared to a net income of $1.1 billion for the fourth quarter of 2021.

Moreover, Digital Banking pretax income of $1.3 billion for the quarter was $141 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 $112.1 billion, up 20% year-over-year, and up 7% sequentially. Net interest income for the quarter increased $584 million, or 24% driven by higher average receivables and net interest margin expansion. Net interest margin was 11.27%, up 46 basis points versus the prior year. Payment Services pretax income of $37 million was up $134 million year-over-year. Higher revenue was driven by $138 million net losses on equity investments in the prior year quarter compared to $6 million net losses in the current year quarter. Payment Services volume was $86.4 billion, up 4% year-over-year. PULSE dollar volume was up 3% primarily driven by increased debit transaction volume. Diners Club volume was up 24% year-over-year reflecting an improvement in global T&E and corporate spending. Network Partners volume decreased 7% from the prior year primarily reflecting lower transaction volume.

DFS in the fourth quarter of FY 22 has reported the adjusted earnings per share of $3.77, beating the analysts’ estimates for the adjusted earnings per share of $3.66, according to Refinitiv. The company had reported the adjusted revenue of $3.73 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue of $3.66 billion.

Additionally, during the fourth quarter of 2022, the company repurchased approximately 5.9 million shares of common stock for $602 million. Shares of common stock outstanding declined by 2.1% from the prior quarter. The company has declared a quarterly cash dividend of $0.60 per share of common stock payable on March 9, 2023, to holders of record at the close of business on February 23, 2023.