Discover Financial Services (NYSE:DFS) shares fell more than 8% in early trade after it reported a 62% year-over-year drop in its fourth quarter profits.
Its profit fell sharply from $1 billion to $388 million as the bank was hit by increased operating costs including higher compliance-related expenses.
It also set aside $1.91 billion for credit losses in 4Q, up from $883 million in the year-ago quarter.
The bank's earnings per share fell 59% from $3.74 to $1.54, below Wall Street analyst expectations of $2.50.
Total loans grew 15% year-over-year to $128.4 billion and revenue net of interest expense was up 13% at $4.2 billion.
“Discover’s performance in 2023 was driven by strong asset and deposit growth and a resilient net interest margin, while net charge-offs increased but to the low end of our expected range," Discover’s interim CEO John Owen said in a statement.
Shares of Discover Financial were down 8.3% at US$99.71 shortly after the stock market opened on Thursday.