Morgan Stanley reported this morning that its Credit Services division, including the “Discover Card,” posted lower net income for the fourth quarter compared to 4Q/02. Net income of $131 million was off 31% compared to one-year ago and down 29% compared to third quarter 2003 profits of $185 million. The lower fourth quarter earnings reflect special charges of $35 million in pretax severance and facilities closing charges. Merchant and cardholder fees were $512 million, down 6% from last year’s fourth quarter. Discover says an increase in merchant discount revenue driven by higher sales activity was more than offset by a decline in cardholder late fees. Total transaction volume declined 9.1% to $23.0 billion, due to a lower level of balance transfers. Account growth was flat, but active accounts declined more than 8% from 4Q/02. The credit card net charge-off rate was 6.87%, 91 basis points higher than a year ago but 3 basis points lower than the third quarter. The over-30-day-delinquency rate declined 8 basis points from last quarter to 5.97%, and the over-90-day-delinquency rate declined 9 basis points over the same period to 2.82%. The decline in the over-30- day-delinquency rate was the third consecutive quarterly decrease. For complete details on Discover’s fourth quarter performance visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
4Q/02* 1Q/03* 2Q/03* 3Q/03* 4Q/03* Y/Y CHNG
Outstandings: $51.1b $51.8b $50.9b $50.0b $48.4b -5.3%
Volume: $25.3b $26.1b $24.0b $24.8b $23.0b -9.1%
Accounts: 46.5m 46.5m 46.4m 46.3m 46.1m -0.9%
Actives: 22.6m 22.3m 21.8m 21.3m 20.8m -8.0%
Chargeoffs: 5.96% 6.17% 6.50% 6.90% 6.87% +91bps
Delinquency: 5.96% 6.33% 6.21% 6.05% 5.97% + 1bps
Yield: 12.45% 11.78% 11.97% 11.94% 12.05% -40bps
4Q/02 ended 11/30/02; 1Q/03 ended 2/28/03; 2Q/03 ended 5/31/03; 3Q/03 ended 8/31/03; 4Q/03 ended 11/30/03.
Source Source: CardData (www.carddata.com)