Discover Financial Services (NYSE:DFS) stock rose 2.90% (As on January 23, 11:26:10 AM UTC-4, Source: Google Finance) after the company reported fourth-quarter earnings that significantly exceeded analyst expectations. Discover’s net income surged 253% YoY to $1.29 billion, compared to $366 million in the same quarter last year. The company benefited from a lower provision for credit losses and increased revenue, partially offset by higher operating expenses. 2024 was a transformative year for the business as the company announced the pending merger with Capital One, exited student lending, and enhanced the risk management and compliance programs.

Moreover, Digital Banking posted pretax income of $1.6 billion for the quarter was $1.2 billion higher than the prior year period reflecting a lower provision for credit losses and increased revenue net of interest expense partially offset by increased operating expenses. Total loans ended the quarter at $121.1 billion, down 6% year-over-year, and down 5% sequentially. Average total loans were up 6% in 2024. Credit card loans ended the quarter at $102.8 billion, up 1% year-over-year, and Personal loans increased $462 million, or 5%. The private student loan sale was successfully completed. Net interest income for the quarter increased $162 million, or 5% year-over-year, driven by net interest margin expansion. Net interest margin was 11.96%, up 98 basis points versus the prior year benefiting from the student loan sale.

Further, Payment Services pretax income of $74 million was up $20 million year-over-year, or 37% primarily due to volume growth and timing of incentives. Payment Services volume was $102 billion, up 4% from the prior year period. PULSE dollar volume was up 7% driven by increased debit transaction volume. Diners Club volume was up 9% year-over-year reflecting strength in Israel and the Asia Pacific region, and Network Partners volume decreased 30% from the prior year due to lower AribaPay volume.

DFS in the fourth quarter of FY 24 has reported the adjusted earnings per share of $5.11, beating the analysts’ estimates for the adjusted earnings per share of $3.20. The company had reported the adjusted revenue growth of 14 percent to $4.76 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $4.41 billion.

Additionally, the company has declared a quarterly cash dividend of $0.70 per share of common stock payable on March 6, 2025, to the holders of record at the close of business on February 20, 2025.