(Reuters) -Discover Financial Services on Wednesday reported a 70% rise in second-quarter profit as a high-interest rate environment helped the U.S. lender earn more interest income.
The company’s shares rose 4.7% to $148 in after-hours trading.
Credit card-focused lenders have outperformed the broader sector this year, benefiting from the rise in interest income. Companies like Discover are protected from mortgage market volatility because customers pay a higher interest rate on their credit cards.
Riverwood, Ill.-based Discover posted net interest income of $3.52 billion in the second quarter, up nearly 11% from the same quarter last year.
Discover’s provision for credit losses fell to $739 million in the quarter ended June 30, compared with 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 will sell a portfolio of student loans to buyout giants Carlyle and KKR for up to $10.8 billion.
In addition, Capital One said Wednesday it would spend $265 billion over five years on loans, philanthropy and investments if the Discover acquisition goes through.
The $35 billion Discover deal will create the largest U.S. credit card issuer by balances and the sixth largest bank by assets. It also gives Capital One control of Discover’s card payment network, the fourth major payment network operator after Visa (NYSE:), Mastercard (NYSE:) and American Express (NYSE:).
