(Reuters) – Discover Financial Services reported a 70 percent jump in second-quarter profit on Wednesday as high interest rates helped the U.S. mortgage issuer earn more in interest.
The company’s shares rose 4.7% to $148 in after-market trading.
Credit card-focused lenders have outperformed the broader sector this year, benefiting from growth in interest income. Firms like Discover are protected from mortgage market volatility because customers are paying higher interest on their credit cards.
Riverwoods, Illinois-based Discover reported second-quarter net interest income of $3.52 billion, up nearly 11% from the same quarter last year.
Discover’s provisions for credit losses decreased to $739 million in the quarter ended June 30 from about $1.31 billion in the same period a year earlier.
Discover’s net income rose to $1.52 billion, or $6.06 per share, from $895 million, or $3.54 per share.
Earlier in the day, Discover said it plans to sell its student loan portfolio to buyout giants Carlyle and KKR for up to $10.8 billion.
In a separate statement Wednesday, Capital One said it would provide $265 billion over five years for lending, philanthropy and investments if the Discover acquisition closes.
Its $35 billion deal with Discover will create the largest U.S. credit card issuer by balances and the sixth-largest bank by assets. It will also give Capital One control of Discover’s card payments network, the fourth-largest payment network operator after Visa (NYSE:), Mastercard (NYSE:) and American Express (NYSE:).
