Discover Financial Services (DFS) said its first-quarter profit slipped 6.2% as the credit-card company recorded higher expenses, masking an increase in total loan growth.
Still, per-share earnings topped Wall Street's estimates.
Discover has benefited from broadening its consumer-lending offerings with student loans, mortgages, and home-equity loans. The company has also benefited from more rapid loan growth than bigger competitors such as American Express Co.
Last month, Discover proposed a 20% increase to its dividend and as much as $1.6 billion in stock buybacks over the next year, moves that would need approval from the Federal Reserve. The lender was among 29 of the 30 largest institutions that the Fed said has enough capital to continue lending even when faced with a hypothetical jolt to the U.S. economy lasting into 2015.
For the latest quarter, Discover reported a profit of $618 million, or $1.31 a share, down from $659 million, or $1.33 a share, for the year earlier period.
Revenue net of interest expenses rose 4.3% to $2.08 billion.
Analysts polled by Thomson Reuters had forecast earnings of $1.25 a share on revenue of $2.11 billion.
Discover's credit-card loans grew 5% to $50.9 billion, with sales volume on its proprietary Discover card up 3%. Credit-card delinquencies of more than 30 days came in at 1.72%, flat compared to the fourth quarter and a five basis points improvement from a year earlier.
Total loans grew 6% from the prior year period to $63.9 billion. Private student loans increased 5%, and personal loans increased 27%.
The provision for loan losses was $270 million, up from $159 million a year earlier, and down from $352 million in the fourth quarter. The reserve build for the first quarter was $59 million.
Total other expenses, including employee compensation benefits and other fees, rose 4.1% to $784 million.