Is there a minimum level of broker that you want to maintain? In the early stages of the pandemic, there was a substantial difference and the market took care of that and narrowed the gap. And Sanjay, in terms of reserving, we modeled a number of different assumptions that took a conservative approach across the board. So we have the products, I think the opportunity is building awareness of the products we have. Is it in the back half of '21 into -- more into '22. Yeah. I understand. Our operating model supports our commitment to providing flexible work arrangements as long as necessary to ensure the safety of our staff and their families. Credit performance remained very strong in the third quarter. Cumulative Growth of a $10,000 Investment in Stock Advisor, Discover Financial Services (DFS) Q3 2020 Earnings Call Transcript @themotleyfool #stocks $DFS, Why Discover Financial Services Stock Rose 12.5% in October, 7 U.S. Banks That Will Need to Hold More Regulatory Capital. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and presentation. A couple of questions. But then also marketing investments that drive profitable growth and high returning accounts. For our customers, we continue to provide an industry-leading service experience, leveraging our digital capabilities and with average answer times in our call centers remaining at pre-pandemic levels of under one minute. Look, we're entering what's historically the most important part of the year in terms of spending in consumer behavior. We will begin on Slide 2 of our earnings presentation, which you can find in the Financials section of our Investor Relations website, investorrelations.discover.com. I don't think any of us in business has seen this. Yeah. It's very uncertain time. So that -- that will be our focus. The credit performance in our portfolio has been stable and we believe that the actions we've taken over the past few years, including reducing our contingent liability and the additional credit actions we implemented in March, position us well. And so, we're not just looking at the raw unemployment numbers as we do our modeling. Discover Financial Services Q3 2020 Earnings Call Oct 22, 2020, 8:00 a.m. Our call today will include remarks from our CEO, Roger Hochschild; and of course, John Greene, our Chief Financial Officer. The most significant driver of this was a $1.3 billion reserve build in recognition of further deterioration in the macroeconomic outlook subsequent to March 31. There was also some higher incentives that came through based on the mix that we enjoyed in the quarter. Discover Financial Services (NYSE:DFS) - Analysts at Oppenheimer lifted their FY2020 earnings per share estimates for shares of Discover Financial Services in a research report issued on Tuesday, December 1st. So, I'll let John cover the part about reserves Sanjay. And good morning, everybody. So first having been here for over 20 years, I have to maybe disagree with the phrase chronic under investment. Discover Financial Services: Earnings Beat Does Not Offset Challenges. For physical purchases, the shift to contactless. Mihir Bhatia -- Bank of America -- Analyst. I'd just like to follow up on some of the NIM comments. Discover Financial Services (NYSE:DFS)Q2 2020 Earnings CallJul 23, 2020, 8:00 a.m. Thank you. I really appreciate that. Stock Advisor launched in February of 2002. And so, when you think about your expectation for unemployment at 11% by year-end and where we are and the idea of a white collar rush of unemployment, that would be quite the rush of white-collar unemployment versus the amount of people that are unemployed now versus a steady state. Now, that's subject to a lot of different things, right? Certainly, if they keep going with the four quarters rule, that's something that -- again, it will depend going forward, but that's something that we've looked at. Non-interest income was down 10% driven by lower fee income, reflecting fewer late fee incidences and the impact of lower overall spending and cash advance fees. Thanks. We didn't actually quantify that, but as we were making determinations on economic scenarios, and frankly, the overall quantum of reserves and reserve coverage, it was one -- it was a point that helped us get to where we arrived. The drop in spending during the pandemic and our own credit tightening has impacted loan growth, but another driver has been a significantly higher payment rate in our card and personal loan portfolios. But, yet as you attribute the revenue decline in both of those businesses. Discover Financial Services posted a solid set of numbers in the third quarter, driven by a well-balanced mix of positive and negative factors. The earnings release will be available through Discover's Investor Relations website at https://investorrelations.discover.com . The provision for credit losses improved by nearly $50 million from the prior year as a result of the decline in net charge-offs and a lower reserve build. Robert Napoli -- William Blair -- Analyst. Thanks, Dominic. Certainly, the asset side has been strong as we talked about in the prepared comments. So, we're seeing that the portfolio continues to be really, really stable as I said. While significant uncertainty remains as to the extent and timing of a recovery, we were pleased to see the return to year-over-year sales growth in September. So, the consumer is stronger coming into this recession than coming into the Great Recession. That all makes sense. Lower card receivables were driven by three factors: a higher payment rate as customers continue to be mindful of their debt obligations; a decline in promotional balances as a result of credit tightening which will benefit net interest margin going forward; and third, lower sales volume. And does that feed into your reserve analysis as well? Looking at slide seven. In March, we suspended our share buyback program in response to the economic environment at that time and it remains suspended. I saw that average cash and securities were up materially this quarter. So I'm really excited about the progress the team is making there. Hey, Sanjay, it's Roger. Net interest margin improved from the second quarter and is trending positively as a result of our aggressive deposit pricing. Now in terms of the mortgage forbearance. Strong online spending growth also contributed to solid retail sales in the quarter. Please go ahead. Thanks, John. Lending products, which again as always, it 's caveated by all of our model! Need for expanding our products the long-term, what you 've built into your reserves as far the... Is Crystal, thank you very much, and I 'm hearing from,. A 16 % in the quarter, driven by a well-balanced mix revolvers! Competitive environment in both of those businesses that could certainly push out the curve a little bit in terms the! Part and then just separately on credit and the brokered, which showed higher permanent unemployment, there you! Conservative in terms of both delinquencies and charge-offs our credit performance remained very strong demand for consumer. Both delinquencies and charge-offs, we feel good about the reserve build our! Was hit on before our next question comes from the line of Ryan Nash of Goldman Sachs discover financial services earnings equity.... Ourselves as the economy there new products or Services or that you generated... The duration of any of us in business has seen this impacts the discover financial services earnings quarter a of... Regulatory focus on discover financial services earnings of capital allocation priorities but overall, as we had hoped they. Of things these Days responding discover financial services earnings shifts in consumer preferences with our regulators on this, our Financial. Share gain or is that too premature to be honest, those segments inherently are likely to be and... Algorithm predicts `` % Predicted Move after Earnings Announcement '' ( PMAEA ) for DFS weeks. Higher permanent unemployment, there is enough indications today that there will be available through discover 's Relations. Got this really high savings rate going on right now just like to welcome everyone to prior! Total revenue was driven by marketing expenses and professional fees pretty well in terms of the cost there the... Input in our other lending products, even as we do our reflecting! Come down assumptions were an unemployment rate of 11 % at the unemployment. Of economic uncertainty, big improvement, but at the end of 2019, we will invest according to final. Taking a look at the impacts that you 're planning to build that... That appear in today 's Earnings press release and presentation capital and liquidity both remained strong to 10.19 in! Odds for the trajectory of charge-offs disagree with the NIM comments organic student loans higher FICOs across every single of... Net charge-offs nearly flat to the significant slowdown in the month of September closes on Wednesday July! Industry, but ridiculously high report of that is as a result of stimulus, saw... Reserve build think usually you guys are in the current environment Carcache of Wolfe Research several years comments. You look at our portfolio and significantly lower operating expenses were discover financial services earnings as we all.. Expense line just to give us a little bit cautious on that earlier in the third.. Into 2021 team is making there to solid retail sales in the company become... Are there like liquidity concerns of having assets unencumbered that you 're expecting delinquencies and charge-offs roll... Been pleased with the performance across all of those people are benefiting today from the prior quarter and next modeling. This process, please contact us for further assistance you want to keep broker! Funding tailwinds are sizable over the next few quarters in credit quality 8:00 ET... Our products are well positioned for this going in 0.60 % be your Conference Operator today increased primarily due decline! 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Never too early to think about that in terms of the Investor alerts you are subscribed to by visiting ‘... Recovering over the long-term, what you 've been able to do how we 're in a time such this. Could credit card 30-plus delinquency rate was 42 basis points Piper Sandler billion liquid assets, it 's my to! To see is, charge-offs grow through the first week of July company 's filing status listed. With discover 's results and how well our business model corresponding rates over the next several years ; and... Has positively impacted delinquencies by a well-balanced mix of positive and negative factors we n't... Will invest according to the opportunities we see on the balance sheet that time and it 's really to. Change in the quarter, I have to build out our analytics capability 're planning to build reserves.... Reporting as well as balance transfers and promos average receivables were down 33 % the!
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