Morgan Stanley reported this morning that its Credit Services/Discover Card division posted fourth quarter net income of $193 million, a 31% gain from a year ago. Discover card receivables were up a modest 4.6% and credit card charge volume was down 3% from last year. MS says the increase in profits during the quarter ending November 30th was driven by higher net interest income and lower marketing and business development expenses, partially offset by an increase in net charge-offs. In addition, merchant and cardholder fees increased 12% from a year ago to $539 million. However higher cardholder fees were primarily responsible for the increase. Discover said the decline in transaction volume was largely the result of lower balance transfers. The chargeoff rate was essentially flat with the prior quarter, but up 128 basis points from a year ago. The over-90-day delinquency rate was 3.02% compared to 2.42% in fourth quarter 2000. The decline in credit quality reflects the weakness in the U.S. economy, a high level of national bankruptcy filings and the adverse impact of the seasoning of cardholder accounts. During 4Q/01, Discover opened 995,000 accounts and 161,000 new merchant locations. For complete details on Discover’s 4Q/01 current and historical performance visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
4Q/00* 1Q/01* 2Q/01* 3Q/01* 4Q/01*
Receivables: $47.1b $49.5b $50.2b $49.7b $49.3b
Volume: $22.8b $24.4b $23.5b $23.3b $22.1b
Accounts: 42.6m 43.7m 44.7m 45.4m 45.7m
Actives: 23.8m 24.0m 24.3m 24.0m 24.0m
Chargeoffs: 4.57% 4.79% 4.98% 5.79% 5.85%
Delinquency: 5.92% 6.34% 5.84% 6.31% 6.85%
Yield: 14.13% 13.66% 13.34% 13.34% 13.48%
*4Q/00 fiscal quarter ended 11/30/00; 1Q/01 fiscal quarter ended 2/28/01;
2Q/01 fiscal quarter ended 5/31/01; 3Q/01 fiscal quarter ended 8/31/01;
4Q/01 fiscal quarter ended 11/30/01.
Source: CardData ([www.carddata.com])