- Discover Financial Services (DFS, Financial) reported a Q1 2025 net income of $1.1 billion, a 30% increase from the previous year.
- Total revenue net of interest expense rose by 2% year-over-year to $4.25 billion.
- Discovery's merger with Capital One is expected to close on or about May 18, 2025, pending customary conditions.
Discover Financial Services (DFS) announced a net income of $1.1 billion, or $4.25 per diluted share, for the first quarter of 2025. This marks a significant 30% rise compared to the $851 million, or $3.25 per diluted share, recorded in the same period last year.
Total revenue, net of interest expense, reached $4.25 billion, reflecting a 2% increase from the previous year. A strong net interest margin and favorable credit trends contributed to this growth, despite a 7% year-over-year decline in total loans to $117.4 billion, largely due to a student loan sale.
The company's digital banking segment saw a pretax income of $1.4 billion, an increase of $316 million from the previous year, owing to a lower provision for credit losses and increased revenue, despite higher operating expenses.
Discover reported a total net charge-off rate of 4.99%, slightly up by 7 basis points from last year. However, excluding the student loan sale, the rate would have shown a decline. Credit card loans remained flat, ending the quarter at $99 billion.
Payment services saw a pretax income growth of 11%, reaching $91 million, fueled by volume increases in PULSE and Diners Club, alongside reduced expenses. Although the payment services volume dipped by 4% year-over-year to $96 billion, PULSE's dollar volume rose by 3% due to higher debit transactions.
Additionally, Discover's Board of Directors declared a quarterly dividend of $0.70 per share, with payment scheduled for June 5, 2025, to shareholders recorded by May 23, 2025. However, due to the merger with Capital One expected to close by May 18, shareholders will instead receive any declared dividend from Capital One for that period.
Looking ahead, Discover is poised to merge with Capital One, having received all necessary regulatory approvals, with closure anticipated on or about May 18, 2025, subject to standard closing conditions.
