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Jun 30, 2021
Discover Q2 2021 Earnings Report
Discover reported a strong Q2 2021 with significant net income and EPS, driven by growth in digital banking and payment services.
Key Takeaways
Discover Financial Services reported a net income of $1.7 billion, or $5.55 per diluted share, for Q2 2021, a significant improvement compared to the net loss of ($368) million, or ($1.20) per diluted share, in Q2 2020. The results were driven by strong marketing investments, a strong value proposition, and accelerating sales trends, leading to sequential card receivables growth and improved credit performance. The company also increased its dividend and share repurchase authorization.
Net income reached $1.7 billion, or $5.55 per diluted share, a substantial increase from the prior year's net loss.
Digital Banking pretax income was $1.5 billion, driven by a decrease in the provision for credit losses and higher revenue.
Payment Services pretax income was $692 million, boosted by a one-time gain on an equity investment.
The Board of Directors approved a new $2.4 billion share repurchase program and increased the quarterly common stock dividend by 14%.
Revenue by Segment
Forward Guidance
Discover anticipates continued loan growth and increased marketing investments to accelerate growth in future periods.
Positive Outlook
- Confidence in loan growth expectation for this year.
- Opportunity to increase marketing investments.
- Opportunity to increase other investments to accelerate growth in future periods.
- Strong marketing investments.
- Accelerating sales trends.
Challenges Ahead
- Global T&E spend remains below pre-pandemic levels.
- Intangible impairment in Diners business due to global T&E spend remaining below pre-pandemic levels.
- Competition
- Economic conditions
- Regulation
Historical Earnings Impact
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Avg. Return Before/After Earnings
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