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Discover Financial Services Post Strong Numbers

In a pleasant surprise for shareholders, Discover Financial Services posted better than expected profits exceeding what just about every financial analyst had predicted for the third quarter of 2011.

While analysts predicted earnings of $.96 per share, discover Came through with $1.18 per share. Discover enjoyed a healthy bump in net income from $261 million in Q3 2010 to $649 million Q3 in 2011.

Discover’s healthier than expected bottom line can be attributed to several factors. First and foremost, defaults saw an 86% decline in a scant 12 month period. In 2011 Discover earmarked $100 million to cover defaults as opposed to a whopping $713 million in 2010.

Discover cards also saw a healthy 9% increase totaling $26.3 billion of purchases by cardholders. Interest income and loans also enjoyed positive growth and accounts that are late 30 days or more went from 230,669 to 131,403.

Discover has stated that they will use their revenue to buy back their own stock as well as acquire new businesses. Chairman and Chief Executive Officer David Nelms made a statement whereby he credited improvements in credit performance and record-setting sales for Discover’s strong performance.

Nelms is not alone in his praise for Discover Financial Services. Analysts across the board also like what they see and expect Discover to continue to outshine its competitors in the very volatile financial services sector.

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