Discover Financial Services today reported net income for 3Q08 of $180 million, or $.37 per share, which is an 11% drop from income reported in the 3Q07.
The third-quarter managed net charge-off rate increased 5.20%, increasing 21 and 154 basis points, respectively, from last quarter and last year.
Provision for loan losses increased $336 million, or 80%, due to higher net charge-offs and a $113 million charge to increase loan loss reserves related to owned loan growth in the quarter, as well as a higher reserve rate.
"While the consumer credit environment and funding costs continue to be challenging, Discover's results demonstrate the underlying quality of our customer base and reflect our disciplined loan underwriting process and multi-channel funding strategy," said David Nelms, chief executive officer of Discover Financial Services. "Card sales volume and receivables grew this quarter as our card members took advantage of the value provided by our various Discover products and programs. The acquisition of Diners Club International, completed this quarter, has quickly added to the already strong results of our Third-Party Payments segment."
