LOS ANGELES (AP) — Discover Financial Services' net income grew 7 percent in the second quarter as credit card spending and overall loans increased from a year ago. The results beat Wall Street's expectations.
The credit card issuer and lender said Tuesday that card loans and sales volume for the company's namesake card both climbed 6 percent, reflecting increased spending by its cardholders. More of those cardholders also elected to carry balances rather than pay them off, helping drive interest revenue for the company.
Personal loans jumped 26 percent, while private student loans rose 5 percent. All told, total loans jumped 7 percent in the April-June quarter.
"We are achieving increased wallet share with existing customers and adding loans from new accounts as well," Discover Chairman and CEO David Nelms said during a conference call with Wall Street analysts.
Discover has been working to expand its credit card business, adding features like free credit scores on cardholder statements and a new cash-back reward card aimed at students. It's also taken steps to make its private student loans more attractive, including introducing lower interest rates for students applying for loans and offering a 1 percent cash reward for borrowers who achieve good grades.
The Riverwoods, Illinois-based company's latest results suggest consumers are feeling better about spending and taking on debt, something echoed by recent retail sales and consumer borrowing data.
Consumer spending at retail stores picked up an average of 0.5 percent in the April-June quarter after a severe winter weighed on sales earlier this year.
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