‘While the unemployment numbers remain relatively in line and strong by historical standards, we are seeing some indications of stress,’ CFO says
Shares of Discover Financial Services on Thursday were on pace for their lowest close since early 2021 after the credit-card provider set aside more money during the third quarter to cover loan losses amid what it said were “some indications of stress” among consumers.
Discover DFS, -7.90%, in its third-quarter earnings release on Wednesday, reported a provision for credit losses of $1.7 billion, a $929 million increase from the prior year, driven by a reserve build that was $297 million higher and by a higher net charge-off rate, a gauge of debt that is unlikely to be repaid.
He said that household net worth and savings “have deteriorated,” particularly among borrowers with lower credit scores. Still, he said, consumer credit was generally holding up, and the company expects charge-offs to peak at some point around the second half of next year.
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