(Updates with card sales volume in fifth paragraph.)
July 22 (Bloomberg) -- Discover Financial Services, the U.S. payments network whose shares have outperformed its three bigger rivals this year, posted a profit that beat analysts’ estimates as credit-card spending increased.
Second-quarter net income rose 7 percent to $644 million, or $1.35 a share, from $602 million, or $1.20, a year earlier, the Riverwoods, Illinois-based lender said today in a statement. The average estimate of 24 analysts surveyed by Bloomberg was for profit of $1.30 a share.
Chief Executive Officer David Nelms, 53, is seeking to expand beyond credit cards by increasing the company’s student lending, direct checking and mortgage businesses. U.S. retail sales increased 0.2 percent in June, the Commerce Department said last week, as more Americans returned to work.
“Slow and steady wins the race,” Jason Arnold, an analyst at RBC Capital Markets, said in a phone interview before results were announced. “Discover is just chipping away at their business and getting growth.”
Discover card sales volume rose 6.4 percent to $29.3 billion from a year earlier, while net revenue climbed by the same percentage to $2.17 billion, the company said.
Discover gained 1.2 percent to $64.06 at 4:04 p.m. in New York. The shares increased 15 percent this year, compared with the 0.6 percent decline of Visa Inc. and MasterCard Inc.’s 6.3 percent slide. American Express Co., the biggest credit-card issuer by purchases, advanced 2.9 percent this year.