發現金融 (DFS) 2024 Q2 法說會逐字稿

Good morning. My name is Todd and I will be your conference operator today. At this time, I would like to welcome everyone to the Second-Quarter 2024 Discover Financial Services Earnings Conference Call. (Operator Instructions)

早安.我叫托德，今天我將擔任你們的會議操作員。此時此刻，我歡迎大家參加 2024 年第二季 Discover Financial Services 財報電話會議。 （操作員說明）

Thank you. I will now turn the call over to Mr. Eric Wasserstrom, Senior Vice President of Corporate Strategy and Investor Relations. Please go ahead.

謝謝。我現在將把電話轉給企業策略和投資者關係資深副總裁 Eric Wasserstrom 先生。請繼續。

Thank you. And welcome to this morning's call. I'll begin by referencing slides 2 and 3 of our earnings presentation, which you can find in the financial section of our Investor Relations website, investorrelations.discover.com. Our discussion today contains certain forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially.

謝謝。歡迎大家參加今天早上的電話會議。我會先參考我們收益簡報的投影片 2 和 3，您可以在我們的投資人關係網站 Investorrelations.discover.com 的財務部分找到這些投影片。我們今天的討論包含某些前瞻性陳述，這些陳述存在風險和不確定性，可能導致實際結果出現重大差異。

Please refer to our notices regarding forward-looking statements that appear in the second quarter 2024 earnings press release and presentation, as well as the risk factors detailed in our annual report and other filings with the SEC.

請參閱我們關於 2024 年第二季財報新聞稿和簡報中出現的前瞻性陳述的通知，以及我們向 SEC 提交的年度報告和其他文件中詳細說明的風險因素。

Our call today will include remarks from our interim CEO, Michael Shepherd; and John Greene, our Chief Financial Officer. There will be no question-and-answer session today Following today's remarks for any is now my pleasure to turn the call over to Michael.

我們今天的電話會議將包括我們的臨時執行長 Michael Shepherd 的演講；和我們的財務長約翰·格林。今天不會有問答環節 在今天的演講之後，我很高興將電話轉給邁克爾。

Thank you, Eric. Good morning and welcome to our guests who have joined today's call. Discovery second quarter operating performance was very good and we advanced several strategic priorities.

謝謝你，埃里克。早安，歡迎參加今天電話會議的嘉賓。 Discovery第二季的營運表現非常好，我們推進了幾個策略重點。

Let me highlight a few of these accomplishments. On July 17, we entered into an agreement to sell our private student loan portfolio to affiliates and limited partners of Carlyle and KKR. First, Mark, a division of Nelnet will assume responsibility for servicing the portfolio upon sale.

讓我重點介紹其中一些成就。 7 月 17 日，我們簽訂了一項協議，將我們的私人學生貸款組合出售給凱雷和 KKR 的附屬公司和有限合夥人。首先，Nelnet 的一個部門 Mark 將負責為出售後的產品組合提供服務。

This agreement represents important milestone in our journey to simplify our operations and business mix. The completion of the sale also has financial implications, which John Greene will detail in a few moments.

該協議是我們簡化營運和業務組合過程中的重要里程碑。出售的完成還會產生財務影響，約翰·格林將稍後詳細介紹。

As we can to resolve past issues and strengthen our risk management and compliance posture, we have entered into a settlement agreement to resolve the merchant class actions associated with the card misclassification litigation subject to court approval.

由於我們能夠解決過去的問題並加強我們的風險管理和合規態勢，因此我們已簽訂和解協議，以解決與卡片錯誤分類訴訟相關的商戶集體訴訟，但須經法院批准。

Decision to settle was based upon our internal reviews, extensive dialogue with key constituencies, including merchants and regulators and our pending merger with Capital one. The settlement agreement would resolve claims by parties affected by the card misclassification, including the merchants, acquirers and intermediaries.

和解決定是基於我們的內部審查、與包括商人和監管機構在內的主要群體的廣泛對話以及我們即將與第一資本合併。和解協議將解決受卡片錯誤分類影響的各方（包括商家、收單機構和中介機構）的索賠。

Our current remediation reserve is sufficient to cover the expenses under the terms of the settlement agreement. Our results also benefited from a litigation settlement in our Payment Services segment for Discover was the plaintiff. We are happy to have this matter resolved and are satisfied with the favorable financial outcome.

我們目前的補救準備金足以支付和解協議條款下的費用。我們的業績也受惠於原告 Discover 支付服務部門的訴訟和解。我們很高興解決了這個問題，並對良好的財務結果感到滿意。

Finally, turning to our pending merger with Capital one. Capital one continues to lead the integration planning process and the teams are working well together on integration planning and regulatory applications. Upcoming merger related milestones include a virtual public hearing hosted by the Federal Reserve and the OCC.

最後，談談我們即將與第一資本合併。第一資本繼續領導整合規劃流程，各團隊在整合規劃和監管應用方面合作良好。即將到來的與合併相關的里程碑包括由聯準會和 OCC 主辦的虛擬公開聽證會。

The completion of the written comment period in-person public hearing with the Delaware State Bank commissioner and the filing of the definitive merger proxy.

完成與特拉華州銀行專員的書面評論期現場公開聽證會並提交最終合併委託書。

We expect shareholder votes to occur this fall. We are encouraged by how the branding and application processes are progressing and continue to believe that the strategic rationale, operating scale and economics of the combined company are compelling.

我們預計股東投票將於今年秋天進行。我們對品牌和應用流程的進展感到鼓舞，並繼續相信合併後公司的策略原則、營運規模和經濟效益令人信服。

With that, I'll now ask John Greene to review our second quarter 2024 financial results.

現在，我將請 John Greene 審查我們 2024 年第二季的財務表現。

Thank you, Michael, and good morning, everyone. I'll start with our summary financial results on slide 5. In the quarter, we reported net income of $1.5 billion, which was up 70% from the prior year quarter. Our fundamental performance in the period was driven by revenue expansion from loan growth, higher net interest margin in the non-interest revenue growth.

謝謝你，邁克爾，大家早安。我將從投影片 5 中的財務業績摘要開始。我們在此期間的基本績效是由貸款成長帶來的收入擴張以及非利息收入成長帶來的更高的淨利差所推動的。

Credit continues to perform in line with expectations, supporting our view that losses are near peak and will plateau during the second half 2024.

信貸表現繼續符合預期，支持了我們的觀點，即損失已接近峰值，並將在 2024 年下半年趨於穩定。

There are several unusual items which impacted the quarter. These included a $869 million student loan reserve released a gain of $26 million from the sale of our Lake Park facility and largely offsetting one another word that favorable litigation settlement and a charge for expected regulatory penalties related to the card misclassification manner.

有幾個不尋常的項目影響了本季。其中包括 8.69 億美元的學生貸款準備金，因出售 Lake Park 設施而獲得 2600 萬美元的收益，並在很大程度上抵消了有利的訴訟和解以及與卡錯誤分類方式相關的預期監管處罰的費用。

Excluding unusual items, we would have reported net income of approximately $915 million and EPS of about $3.63 per share.

排除異常項目，我們的淨利潤約為 9.15 億美元，每股收益約為 3.63 美元。

Let's review the details beginning on slide 6. Our net interest margin ended the quarter at 11.17%, up 11 basis points from the prior year and up 14 basis points sequentially. On a quarter-over-quarter basis margin expansion was primarily driven by a lower card promotional balance mix has anticipated receivables growth continues to normalize from its early 2023 peak.

讓我們回顧一下從投影片 6 開始的詳細資訊。從季度環比來看，利潤率擴張主要是由於信用卡促銷餘額組合下降所致，預計應收帳款成長將從 2023 年初的高峰繼續正常化。

Card receivables increased 7% year over year due to a lower payment rate in a smaller contribution from new accounts. The payment rate declined about 130 basis points compared to last year and is now about 90 basis points above 2019 levels.

由於新帳戶貢獻較小，支付率較低，卡片應收帳款年增 7%。支付率比去年下降約 130 個基點，目前比 2019 年水準高出約 90 個基點。

Discover Card sales were down 3% compared to the prior year spending at restaurants, which is a large category for sales volume declined sequentially as a result of being included in the 5% promotion during the first quarter.

與前一年相比，Discover 卡銷售額下降了 3%。

Accounting for the influence of promotional categories, sales trends relatively stable. We continue to see a cautious consumer evidenced by less card member spend with lower income households being most affected.

考慮到促銷品類的影響，銷售趨勢相對穩定。我們繼續看到消費者持謹慎態度，持卡人支出減少，低收入家庭受到的影響最大。

Personal loans were up 13% from the prior year period. In response to market conditions, we prudently tightened underwriting over the past year, which has served to modestly reduced originations.

個人貸款較上年同期成長 13%。過去一年，我們根據市場情況審慎收緊承保，適度減少了承保規模。

Student loans were down 1% year over year. As Michael mentioned, we have entered into an agreement to sell our student loan portfolio. We expect the transaction to be completed in four tranches by the end of 2024 the purchase price is at a premium to the principal balance and is based on a formula that varies depending on the closing timing, interest rates and other factors.

學生貸款較去年同期下降1%。正如邁克爾所提到的，我們已經簽訂了出售學生貸款組合的協議。我們預計該交易將在 2024 年底前分四次完成，購買價格高於本金餘額，並且基於根據成交時間、利率和其他因素而變化的公式。

In association with this development, student loans are now accounted for as held for sale. The two most notable impacts to the financial statements are that we will no longer maintain at credit reserve for student loans and future student loan net charge-offs will be recognized through operating expense rather than credit losses.

與這一發展相關，學生貸款現在被視為持有待售。對財務報表最顯著的兩個影響是，我們將不再保留學生貸款的信貸準備金，並且未來的學生貸款淨沖銷將透過營運費用而不是信貸損失來確認。

Average consumer deposits were up 15% year over year and 1% sequentially. Deposit balances are being managed in relation to our liquidity needs, which will benefit from the student loan sale.

平均消費者存款年增 15%，較上季成長 1%。存款餘額的管理與我們的流動性需求有關，這將受益於學生貸款銷售。

Our disciplined approach to deposit pricing has led to a modest reduction in average deposit rates in the second quarter, consistent with the practice of leading the industry on pricing in there down parts of the cycles.

我們嚴格的存款定價方法導致第二季平均存款利率小幅下降，這與在部分週期中引領產業定價的做法是一致的。

Looking at other revenue on slide 7, noninterest income increased $313 million or 45%. Discount and interchange revenue was up $67 million as a result of lower rewards cost.

查看投影片 7 上的其他收入，非利息收入增加了 3.13 億美元，即 45%。由於獎勵成本降低，折扣和互換收入增加了 6700 萬美元。

Our rewards rate was 132 basis points in the period, a decrease of 10 basis points versus the prior year. quarter, the decline reflects lower Cashback Match. Other income increased due to unusual items, including then litigation settlement and the facility sale. On an adjusted basis, non-interest revenue grew 14%.

期內我們的獎勵率為 132 個基點，較前一年下降 10 個基點。本季的下降反映了現金返還匹配的減少。其他收入因不尋常的項目而增加，包括當時的訴訟和解和設施出售。調整後的非利息收入增加了14%。

Moving to expenses on slide 8. Total operating expenses were up $325 million or 23% year over year. The most significant driver of this increase was a charge for expected regulatory penalties related to the card misclassification issue.

轉到幻燈片 8 上的費用。這一增長的最重要推動因素是與卡片錯誤分類問題相關的預期監管處罰。

It is important to note that actual penalties imposed are subject to further discussions and may be more or less than this amount.

值得注意的是，實際處罰有待進一步討論，可能高於或低於這筆金額。

Adjusting for this charge, our expense this would have increased by 9% year over year. Looking at our major expense categories, compensation costs increased $70 million of 12%, primarily due to an increase in business technology resources.

調整此項費用後，我們的費用將比去年同期增加 9%。從我們的主要支出類別來看，薪酬成本增加了 7,000 萬美元，成長了 12%，這主要是由於業務技術資源的增加。

Professional fees were up $80 million or 37%, driven by higher recovery fees and investment income clients and risk management.

由於回收費用和投資收入客戶以及風險管理的增加，專業費用增加了 8,000 萬美元，即 37%。

Our expectation for compliance and risk management expenses for the full year remains in a $500 million range with an upside bias. This figure excludes card misclassification related cost. Moving to credit performance on slide 9.

我們對全年合規和風險管理費用的預期仍保持在 5 億美元的範圍內，並存在上行傾向。該數字不包括與卡片錯誤分類相關的成本。轉向幻燈片 9 上的信用表現。

Total net charge-offs were 4.83%, 161 basis points higher than the prior year and down nine basis points from the prior quarter. In card delinquency formation improvement continued that 30 plus day delinquency rate was down 14 basis points versus the prior quarter.

淨沖銷總額為 4.83%，較上年同期高 161 個基點，較上季下降 9 個基點。銀行卡拖欠率持續改善，超過 30 天的拖欠率比上一季下降了 14 個基點。

From a vintage perspective, our 2023 card vintage continues to perform in line with our 2022 vintage. As we look into the second half of the year, we expect there could be some variability and monthly card losses from both seasonality and various credit management actions we've taken. This has not changed our broader outlook for losses to generally peak in plateau this year.

從年份角度來看，我們 2023 年卡牌年份的表現繼續與 2022 年年份一致。當我們展望今年下半年時，我們預計由於季節性和我們採取的各種信用管理措施，可能會出現一些變化和每月卡損失。這並沒有改變我們對今年虧損普遍達到頂峰的更廣泛前景。

Turning to the allowance for credit losses on slide 10. Our credit reserve balances declined $777 million from the prior quarter, reflecting the student loan reserve release, partially offset by a $92 million reserve build primarily to support loan growth.

轉向幻燈片10 上的信貸損失準備金。金的部分抵銷。

Our reserve rate was just over 7.2% lower, largely unchanged after adjusting for student loans.

我們的準備率下降了 7.2% 以上，在調整學生貸款後基本上沒有變化。

Looking at slide 11, our common equity Tier one for the period was 11.9%, up 100 basis points bolstered by core earnings generation and the reserve release, we declared a quarterly cash dividend of $0.7 per share of common stock.

看投影片 11，我們這段期間的普通股一級資本率為 11.9%，在核心獲利產生和儲備金釋放的推動下上升了 100 個基點，我們宣布季度現金股利為每股普通股 0.7 美元。

Concluding on slide 12, we have revised our 2024 outlook and having included the impacts of the pending student loan sale, we are updating our loan growth expectations to be down low single digits, reflecting a roughly $10 billion asset sale.

在投影片12 中，我們修改了2024 年的展望，並考慮了待決的學生貸款出售的影響，我們正在更新貸款成長預期，將其下調至低個位數，反映出大約100 億美元的資產出售。

Absent this year over year, loan growth would be consistent with our prior view. We are increasing our net interest margin range to 11.1% to 11.4%.

如果沒有今年的情況，貸款成長將與我們先前的觀點一致。我們將淨利差範圍提高至 11.1% 至 11.4%。

This change was driven by two factors. We now anticipate higher card yields, reflecting a lower promotional balance mix and the student loan sale, which increases nim by about 10 basis points. Our operating expense guidance is unchanged, notwithstanding the inclusion of the student loan net charge-offs in this line item.

這項變化是由兩個因素所驅動的。我們現在預計卡片的收益率會更高，這反映出促銷餘額組合和學生貸款銷售的減少，這使得尼姆增加了約 10 個基點。儘管在該行項目中包含了學生貸款淨沖銷，但我們的營運費用指引保持不變。

Our base case for net charge-offs remains at the low end of the 4.9% to 5.2% range. This includes the 10 basis points impact from student loans.

我們對淨沖銷的基本預測仍處於 4.9% 至 5.2% 範圍的低端。這包括學生貸款 10 個基點的影響。

And finally, our capital management expectations have not changed. To summarize, we continue to generate solid financial results, remain steadfast in our efforts to resolve compliance matters and look forward to consummating our planned merger.

最後，我們的資本管理預期沒有改變。總而言之，我們將繼續取得穩健的財務業績，堅定不移地努力解決合規問題，並期待完成我們計劃的合併。

This concludes our remarks. I'll turn the call back over to the operator.

我們的發言到此結束。我會將電話轉回給接線生。

This concludes today's call. The discovery Investor Relations team will be available for questions. Thank you for joining. You may now disconnect.

今天的電話會議到此結束。發現投資者關係團隊將隨時回答問題。感謝您的加入。您現在可以斷開連線。