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A Look at Discover’s Direct Banking Segment

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Pretax income

Discover Financial Services’ (DFS) Direct Banking segment generated pretax income of $3.4 billion in 2017. In 2016, it generated pretax income of $3.5 billion. The segment’s net interest income rose from $7.2 billion in 2016 to $8.0 billion in 2017, primarily due to favorable momentum in yields with respect to its credit card portfolio and increased loans.

Moving forward, this segment is expected to witness a rise in its net interest income, mostly aided by a rise in interest rates. The segment saw a rise in interest expenses from $1.4 billion in 2016 to $1.6 billion in 2017. The segment generated total other income of $1.6 billion in 2017.

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What led to a rise in other expenses?

Discover Financial Services’ (DFS) Direct Banking segment saw a rise in the total other expenses from $3.4 billion in 2016 to $3.6 billion in 2017. This trend was primarily due to marketing and business development expenses. Professional fees and employee compensation were also among the primary contributors.

A rise in the company’s employee compensation expenses occurred on the back of increased employees, nonrecurring special bonuses, and a rise in its average salaries. The segment’s professional fees increased primarily due to deployments made with respect to infrastructure and technology.

Discover Financial has a dividend yield of ~1.8% on an LTM (last-12-months) basis ended December 31, 2017. Among the other major players (XLF), American Express (AXP), Global Payments (GPN), and Capital One Financial (COF) have dividend yields of ~1.4%, 0.04%, and ~1.7%, respectively, on an LTM basis.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

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