Discover Financial Services climbed the most in almost five years, leading credit-card issuers higher, after gains in card spending helped fuel a first-quarter profit that beat analysts’ estimates.
Discover rose 8.2 percent to $56.84 at 4:01 p.m. in New York, the most since August 2011 and the best performance in the Standard & Poor’s 500 Index. The shares have gained 6 percent this year.
Total loans rose 4 percent to $70.3 billion in the quarter as credit-card lending increased by a similar percentage to $55.6 billion, the Riverwoods, Illinois-based firm said Tuesday in a statement. Chief Executive Officer David Nelms reiterated the company’s forecast of 4 percent to 6 percent loan growth this year during a call with analysts.
“We believe this was the strongest quarter that DFS has had in quite some time,” Ryan Nash, a Goldman Sachs Group Inc. analyst, said in a note to investors, referring to the company’s stock symbol.
Credit-card issuers were among the top performers in the 90-company Standard and Poor’s 500 Financials Index, led by Discover, Capital One Financial Corp. and Synchrony Financial.
Credit-cards were a bright spot in a tough quarter for some major U.S. banks, which have struggled to raise revenue amid an ongoing slump in fixed-income trading. JPMorgan Chase & Co., the biggest U.S. bank by assets, said credit- and debit-card sales volume increased 7.5 percent to $187.2 billion.
Discover reported earnings per share of $1.35 for the quarter, topping the $1.29 average estimate of 27 analysts surveyed by Bloomberg. Net income fell 1.9 percent to $575 million, while net revenue increased 2.4 percent to $2.22 billion.