Q3 2024 Discover Financial Services Earnings Call
Yes.
[music].
Aaron Steeber: Thank you, and welcome to this morning's call. By way of introduction, I'm Aaron Steeber, Senior Vice President of Financial Planning and Analysis and Investor Relations.
Erin Staber: Thank you and welcome to this morning's call. By way of introduction, I'm Erin Staber, Senior Vice President of Financial Planning and Analysis and Investor Relations.
Speaker Change: Thank you and welcome to this mornings call by way of introduction I'm, Aaron Steeper senior Vice President of financial planning and analysis and Investor Relations.
Erin Staber: Eric Wasserstrom has decided to pursue an opportunity outside the company. We appreciate his contributions to the investor relations and corporate strategy programs over the past four years and wish him well.
Aaron Steeber: Eric Wasserstrom has decided to pursue an opportunity outside the company. We appreciate his contribution to the investor relations and corporate strategy programs over the past four years and wish him well.
Speaker Change: Eric <unk> has decided to pursue an opportunity outside the company.
Speaker Change: We appreciate his contribution to the Investor relations and corporate strategy programs over the past four years and wish him well.
Eric Wasserstrom: I'm excited for this new opportunity and look forward to getting to know all of you over the coming months.
Erin Staber: I'm excited for this new opportunity and look forward to getting to know all of you over the coming months.
Speaker Change: I'm excited for this new opportunity and look forward to getting to know all of you over the coming months.
Aaron Steeber: I'll begin by referencing slides two and three 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. Please refer to our notices regarding forward-looking statements that appear in our third quarter 2024 earnings press release and presentation, as well as the risk factors detailed in our annual report and other filings with the SEC.
Erin Staber: I'll begin by referencing slides two and three 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. Please refer to our notices regarding forward-looking statements that appear in our third quarter 2024 earnings press release and presentation, as well as the risk factors detailed in our annual report and other filings with the SEC.
Speaker Change: I'll begin by referencing slides two and three of our earnings presentation, which you can find in the financials section of our Investor Relations website investor relation that discover dot com.
Speaker Change: Our discussion today contains certain forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially.
Speaker Change: Please refer to our notices regarding forward looking statements that appear in our third quarter 2024 earnings press release and presentation as well as the risk factors detailed in our annual report and other filings with the SEC arc.
Aaron Steeber: Our call today will include remarks from our Interim CEO, Michael Shepard, and John Green, our Chief Financial Officer.
Erin Staber: Our call today will include remarks from our Interim CEO, Michael Shepard, and John Greene, our Chief Financial Officer.
Speaker Change: Our call today will include remarks from our interim CEO, Michael Shepherd, and John Greene, Our Chief Financial Officer.
Aaron Steeber: There will be no question-and-answer session following today's remarks. However, the Investor Relations team will be available for any inquiries.
Erin Staber: There will be no question and answer session following today's remarks. However, the investor relations team will be available for any inquiries.
Speaker Change: There will be no question and answer session. Following todays remarks, however, the investor relations team will be available for any inquiries. It is now my pleasure to turn the call over to Michael.
Michael Shepard: It is now my pleasure to turn the call over to Michael. Thank you, Aaron. Good morning and welcome to today's call. Discoverers' financial performance remains strong in the third quarter, and we continue to advance our critical strategic priorities of driving business results, strengthening risk management and compliance, and planning for the merger with Capital One. We've made significant progress on the execution of the sale of the private student loan portfolio, successfully completing the first of four closings. Additionally, earlier this month, we completed the sale of the second tranche. As we near the end of our student loan disposition journey, we look forward to realizing the benefits of a more focused business model.
Erin Staber: It is now my pleasure to turn the call over to Michael.
Michael Shepard: Thank you, Aaron. Good morning and welcome to today's call. Discover's financial performance remained strong in the third quarter, and we continue to advance our critical strategic priorities of driving business results, strengthening risk management and compliance, and planning for the merger with Capital One. We've made significant progress on the execution of the sale of the private student loan portfolio, successfully completing the first of four closings. Additionally, earlier this month we completed the sale of the second tron.
Michael Shepherd: Thank you Aaron good morning, and welcome to today's call.
Michael Shepherd: Discovery's financial performance remained strong in the third quarter and we continued to advance our critical strategic priorities of driving business results strengthening risk management and compliance and planning for the merger with capital one.
Michael Shepherd: We've made significant progress on the execution of the sale of the private student loan portfolio successfully completing the first of four closings.
Michael Shepherd: Additionally earlier this month, we completed the sale of the second tranche.
Michael Shepard: As we near the end of our student loan disposition journey, we look forward to realizing the benefits of a more focused business model. John will review the details of the sale a bit later in the call. Our risk management and compliance capabilities continue to advance. We are seeing improved results from new programs, which focus on reducing risk and preventing customer harm. Our organization is driven by our commitment to customers, communities and employees. And as part of our culture, we reinforce ethical decision making and customer service through strengthened governance and control. Discover rank number two in customer satisfaction among U.S.
Michael Shepherd: As we near the end of our student loan disposition journey, we look forward to realizing the benefits of a more focused business model.
Michael Shepard: John will review the details of the sale a bit later in the call. Our risk management and compliance capabilities continue to advance.
Speaker Change: John will review the details of the sale a bit later in the call.
Michael Shepherd: Our risk management and compliance capabilities continue to advance.
Michael Shepard: Conference. We are seeing improved results from new programs which focus on reducing risk and preventing customer harm. Our organization is driven by our commitment to customers, communities, and employees. And as part of our culture, we reinforce ethical decision-making and customer service through strengthened governance and controls. Discover rank number two and customer satisfaction among U.S. credit card issuers by JD Power for the fifth consecutive year. We are glad to report that this marks an 18-year run of being ranked either first or second.
Michael Shepherd: We are seeing improved results from new programs, which focus on reducing risk and preventing customer harm.
Michael Shepherd: Our organization is driven by our commitment to customers communities and employees and as part of our culture, we reinforced ethical decision, making in customer service through strengthened governance and controls.
Michael Shepherd: Discover ranked number two in customer satisfaction among U S credit card issuers by J D power for the fifth consecutive year.
Michael Shepard: credit card issuers by J.D. Power for the fifth consecutive year. We are glad to report that this marks an 18-year run of being ranked either first or second.
Michael Shepherd: We are glad to report that this marks an 18 year run of being ranked either first or second.
Michael Shepard: We recently reached two important milestones in our community-based facility strategy. First, we celebrated the grand opening of our Whitehall, Ohio, Customer Care, and Community Center. Marking a significant investment in the region. Second, we achieved 1,000 active jobs in the Chatham neighborhood of Chicago, fulfilling our three-year commitment. We are proud to create valuable jobs and offer free access to state-of-the-art facilities in the communities where we operate. Our employees are a key reason for our success and our award-winning customer service. We are very pleased that employee engagement remains high. Attrition is relatively low, and we continue to be recognized as a great place to work.
Michael Shepard: We recently reached two important milestones in our community-based facilities strategy. First, we celebrated the grand opening of our Whitehall, Ohio Customer Care and Community Center, marking a significant investment in the region. Second, we achieved 1000 active jobs in the Chatham neighborhood of Chicago, fulfilling our three year commitment. We are proud to create valuable jobs and offer free access to state-of-the-art facilities in the communities where we operate. Our employees are a key reason for our success and our award-winning customer service. We are very pleased that employee engagement remains high, attrition is relatively low, and we continue to be recognized as a great place to work.
Michael Shepherd: We recently reached two important milestones in our community based facilities strategy.
Michael Shepherd: First we celebrated the grand opening of our Whitehall, Ohio customer care and community Center.
Michael Shepherd: Mark and his significant investment in the region.
Michael Shepherd: Second we achieved 1000 active jobs and the Chatham neighborhood of Chicago fulfilling our three year commitment.
Michael Shepherd: We are proud to create valuable jobs and offer free access to state of the art facilities and the communities where we operate.
Michael Shepherd: Our employees are a key reason for our success.
Michael Shepherd: And our award winning customer service.
Michael Shepherd: We are very pleased that employee engagement remains high attrition is relatively low and we continue to be recognized as a great place to work.
Michael Shepard: Discover was ranked number 16 by Fortune for best large workplaces in financial services and insurance, and was also recognized as a 2024 Best Place to Work for People with Disabilities.
Michael Shepard: Discover was ranked number 16 by Fortune for best large workplaces in financial services and insurance, and was also recognized as a 2024 best place to work for people with disabilities.
Michael Shepherd: Discover was ranked number 16 by fortune for best large workplaces in financial services and insurance and was also recognized as a 2024 best place to work for people with disabilities.
Michael Shepard: Shifting attention to our pending merger, Capital One continues to lead merger-related activities, with applications currently under regulatory review. Integration planning is advancing well.
Michael Shepard: Shifting attention to our pending merger, Capital One continues to lead merger-related activities with applications currently under regulatory review. Integration planning is advancing well.
Michael Shepherd: Shifting attention to our pending merger capital one continues to lead merger related activities with applications currently under regulatory review.
Michael Shepherd: Integration planning is advancing well.
John Green: With that, I'll now ask John Green to review our third quarter 2024 financial results. Thank you, Michael, and good morning, everyone. I'll start with our summary financial results on slide five. In the quarter, we reported net income of $965 million, which was up 41% from the prior year. Financial performance was strong, driven by revenue growth from modestly higher loan balances. Net interest margin expansion; we recognized a gain from the first closing of the private student loan portfolio sale. And credit is performing in line with expectations, with net charge loss plateauing.
John Greene: With that, I'll now ask John Greene to review our third quarter 2024 financial results.
With that I'll now ask John Greene to review, our third quarter 2024 financial results.
John Greene: Thank you, Michael, and good morning, everyone. I'll start with our summary financial results on slide five. In the quarter, we reported net income of $965 million, which was up 41% from the prior year. Financial performance was strong driven by revenue growth from modestly higher loan balances, net interest margin expansion, we recognized a gain from the first closing of the private student loan portfolio sale, and credit is performing in line with expectations with net charge-offs plateauing. Let's review the details beginning on slide six. Our net interest margin ended the quarter at 11.38%, up 43 basis points from the prior year, and up 21 basis points sequentially.
Michael Shepherd: Sure.
John Greene: Thank you Michael and good morning, everyone I'll start with our summary financial results on slide five.
John Greene: In the quarter, we reported net income of $965 million, which was up 41% from the prior year.
John Greene: Financial performance was strong driven by revenue growth from modestly higher loan balances net interest margin expansion, we recognized a gain from the first closing of the private student loan portfolio sale in.
John Greene: And credit is performing in line with expectations with net charge offs plateauing.
John Green: Let's review the details beginning on slide six. Our net interest margin ended the quarter at 11.38%, of 43 basis points from the prior year and up 21 basis points sequentially. On a quarter-over-quarter basis, margin expansion was primarily driven by a lower card promotional balance mix. Card receivables increased 3% year-over-year due to a lower payment rate, partially offset by a decrease in sales volume. The payment rate declined around 100 basis points from last year, was stable versus a prior quarter, and is approximately 70 basis points above pre-pandemic levels. Discovert card sales were down 3% compared to the prior year.
John Greene: Let's review the details beginning on slide six.
John Greene: Our net interest margin ended the quarter at 11.38% up 43 basis points from the prior year and up 21 basis points sequentially on a quarter over quarter basis margin expansion was primarily driven by a lower card promotional balance mix.
John Greene: On a quarter over quarter basis, margin expansion was primarily driven by a lower card promotional balance mix. Card receivables increased 3% year-over-year due to a lower payment rate, partially offset by a decrease in sales volume. The payment rate declined around 100 basis points from last year, was stable versus the prior quarter, and is approximately 70 basis points above pre-pandemic levels. Discover card sales were down 3% compared to the prior year. Sales were impacted by cautious consumer behavior and credit tightening actions which began in 2022. We expect these dynamics to persist for the remainder of the year.
John Greene: Card receivables increased 3% year over year due to a lower payment rate, partially offset by a decrease in sales volume the.
John Greene: The payment rate declined around 100 basis points from last year was stable versus the prior quarter as approximately 70 basis points above pre pandemic levels.
John Greene: Discover card sales were down 3% compared to the prior year sale.
John Green: Sales were impacted by cautious consumer behavior and credit tightening actions, which began in 2022.
John Greene: Sales were impacted by cautious consumer behavior and credit tightening actions, which began in 2022, we expect these dynamics to persist for the remainder of the year.
John Green: We expect these dynamics to persist for the remainder of the year. Personal loans were up 9% from the prior year. We continue to see strong demand from consumers seeking debt consolidation. The average FICO for new personal loan accounts is above 750. Student loans were down 19% year over year as a result of the first student loan asset sale. We recognize a gain of $70 million in the quarter. As Michael mentioned shortly after the quarter ended, we completed the sale of the second tranche. Approximately 55% of the portfolio has been sold to date. We expect to sell the remaining portions of the portfolio by mid November.
John Greene: personal loans were up 9% from the prior year. We continue to see strong demand from consumers seeking debt consolidation. The average FICO for new personal loan accounts is above 750. Student loans were down 19% year over year as a result of the first student loan asset sale. We recognize a gain of $70 million in the quarter. As Michael mentioned, shortly after the quarter ended, we completed the sale of the second tranche. Approximately 55% of the portfolio has been sold to date. We expect to sell the remaining portions of the portfolio by mid-November. Average consumer deposits were up 11% year over year and 1% sequentially.
John Greene: Personal loans were up 9% from the prior year, we continue to see strong demand from consumers seeking debt consolidation the average FICO for new personal loan accounts is above 750.
John Greene: Yeah.
Student loans were down 19% year over year as a result of the first student loan asset sale.
John Greene: We recognize a gain of $70 million in the quarter.
As Michael mentioned shortly after the quarter ended we completed the sale of the second tranche approximately 55% of the portfolio has been sold to date.
John Greene: We expect to sell the remaining portions of the portfolio by mid November.
John Green: Average consumer deposits were up 11% year over year and 1% sequentially. We are managing deposit balances to meet our liquidity needs, and we have benefited from the student loan sale. We anticipate a through-the-cycle beta of around 70%.
Average consumer deposits were up 11% year over year, and 1% sequentially. We are managing deposit balances to meet our liquidity needs and we have benefited from the student loan sale we.
John Greene: We are managing deposit balances to meet our liquidity needs, and we have benefited from the student loan sale. We anticipate a through the cycle data of around 70%. Looking at other revenue on slide 7, non-interest income increased $76 million or 11%. Other income increased due to the gain from the loan sale. Loan fee revenue was up $20 million driven by higher instances. Our rewards rate was 144 basis points in the period, an increase of two basis points versus the prior year quarter and up 12 basis points sequentially. The increases were driven by changes in the promotional category.
John Greene: So paid a through the cycle beta of around 70%.
John Green: Looking at other revenue on slide 7, non-interesting income increased $76 million, or 11%. Other income increased due to the gain from the loan sale. Lone fee revenue was up 20 million dollars, driven by higher instances. Our rewards rate was 144 basis points in the period, an increase of two basis points versus the prior year quarter and up 12 basis points sequentially. The increases were driven by changes in the promotional categories. During the third quarter of 2024, consumers enjoyed higher rewards, with grocery and Walmart spend earning 5%.
John Greene: Looking at other revenue on slide seven.
John Greene: Noninterest income increased $76 million or 11% other.
John Greene: Other income increased due to the gain from the loan sale.
Loan fee revenue was up $20 million driven by higher instances.
John Greene: Our rewards rate was 144 basis points in the period, an increase of two basis points versus the prior year quarter and up 12 basis points sequentially.
John Greene: The increases were driven by changes in the promotional categories.
John Greene: During the third quarter of 2024, consumers enjoyed higher rewards with grocery and Walmart spend earning 5%.
John Greene: During the third quarter of 2020 for consumers enjoyed higher awards with grocery and Walmart spend earning 5%.
John Green: Moving to expenses on slide 8, total operating expenses were up 238 million dollars, or 16% year over year. Looking at our major expense categories, compensation costs increased 128 million dollars at 22%. Primarily due to higher wage rates and employee retention awards. Information processing increased as a result of technology investment and accelerated student loan software depreciation. And professional fees were up 42 million dollars, or 15%, driven by higher recovery fees and merger and integration cost. We recognize 43 million dollars of merger and integration planning cost in the quarter. $65 million year to date and anticipate about $125 million for the full year 2024, spread across multiple expense categories.
John Greene: Moving to expenses on slide eight. Total operating expenses were up $238 million or 16% year over year. Looking at our major expense categories, compensation costs increased $128 million or 22%, primarily due to higher wage rates and employee retention awards. Information processing increased as a result of technology investment and accelerated student loan software depreciation. And professional fees were up $42 million, or 15%, driven by higher recovery fees and merger and integration costs. We recognize $43 million of merger and integration planning costs in the quarter. $65 million year to date and anticipate about $125 million for the full year 2024 spread across multiple expense categories.
John Greene: Moving to expenses on slide eight.
John Greene: Total operating expenses were up $238 million or 16% year over year.
John Greene: Looking at our major expense categories compensation costs increased $128 million or 22%, primarily due to higher wage rates and employee retention awards.
John Greene: Information processing increased as a result of technology investments and accelerated student loan software depreciation.
John Greene: Professional fees were up $42 million or 15% driven by higher recovery fees and merger and integration cost.
John Greene: We recognized $43 million of merger and integration planning costs in the quarter.
John Greene: $65 million year to date, and anticipate about $125 million for the full year 2024 spread across multiple expense categories.
John Green: We expect total risk management and compliance expense of approximately $550 million in 2024, excluding card misclassification cost.
John Greene: We expect total risk management and compliance expense of approximately $550 million in 2024, excluding card misclassification costs.
John Greene: We expect total risk management and compliance expense of approximately $550 million in 2024, excluding card misclassification cost.
John Green: Moving to credit performance on slide 9, total net charge was 4.86%. 134 basis points higher than the prior year and up 3 basis points from the prior quarter. Adjusting for the impact of reclassifying private student loans to help for sale. The total net charge-off rate would have declined 20 basis points. In card, net charge asked to climb 27 basis points from the prior quarter, outperforming seasonality. 30 plus day, the linkancy formation increased in line with seasonal trends. The 2023 card ventures continues to perform in line with a 2022 vintage and remains highly profitable. An early look at the 2024 vintage suggests improvements compared to 2022 and 2023.
John Greene: Moving to credit performance on slide nine. Total net charge-offs were 4.86%, 134 basis points higher than the prior year and up three basis points from the prior quarter. Adjusting for the impact of reclassifying private student loans to held for sale, the total net charge-off rate would have declined 20 basis points. In CARD, net charge-offs declined 27 basis points from the prior quarter, outperforming seasonality. 30 plus day delinquency formation increased in line with seasonal trends. The 2023 card vintage continues to perform in line with the 2022 vintage and remains highly profitable. An early look at the 2024 vintage suggests improvements compared to 2022 and 2023.
John Greene: Moving to credit performance on slide nine.
John Greene: Total net charge offs were 4.86% 134 basis points higher than the prior year and up three basis points from the prior quarter adjusting for the impact of reclassifying private student loans to held for sale.
John Greene: Total net charge off rate would have declined 20 basis points.
John Greene: And card net charge offs declined 27 basis points from the prior quarter outperforming seasonality.
John Greene: 30, plus day delinquency formation increased in line with seasonal trends.
John Greene: The 2023 card ventures continues to perform in line with the 2022 vintage and remains highly profitable.
John Greene: An early look at the 2024 vintage suggest improvement compared to 2022 and 2023.
John Green: Personal loan net charge-off into the linkancies ticked up modestly, but are well within historical norms, and ventures are meeting profitability targets. We continue to see a stable yet cautious consumer. The labor markets remain strong, and wages are growing. However, households are contending with inflation and the impacts on everyday living expenses. Spend for card member is returning to a more normal level.
John Greene: Personal loan net charge-offs and delinquencies ticked up modestly but are well within historical norms and vintages are meeting profitability targets. We continue to see a stable yet cautious consumer. The labor markets remain strong and wages are growing. However, households are contending with inflation and the impacts on everyday living expenses. Spend per card member is returning to a more normal level. Slower, stable spending indicates that households have adjusted spending patterns to manage their budgets, which is beneficial from a credit standpoint.
John Greene: Personal loan net charge offs and delinquencies ticked up modestly but are well within historical norms and vintages are meeting profitability targets. We continue to see a stable yet cautious consumer the labor markets remained strong and wages are growing however.
John Greene: However households are contending with inflation and the impacts on everyday living expenses.
John Greene: Spend per card member is returning to a more normal level slower stable spending indicates that households have adjusted spending patterns to manage their budgets, which is beneficial from a credit standpoint.
John Green: Slower, stable spending indicates that households have adjusted spending patterns to manage their budgets, which is beneficial from a credit standpoint. Turning to the allowance for credit losses on slide 10, our credit reserve balance increased $31 million from the prior quarter as a result of loan growth. The reserve rate was 7.18%, down four basis points from the prior quarter, driven by our credit performance and modest improvements in the forecast for household net worth and debt service burden. Our economic outlook assumes year-end 2024 unemployment of 4.4% with peak unemployment at 4.6%, and GDP in the 1 to 3% range.
John Greene: Turning to the allowance for credit losses on slide 10, our credit reserve balance increased $31 million from the prior quarter as a result of loan growth. The reserve rate was 7.18%, down four basis points from the prior quarter, driven by our credit performance and modest improvements in the forecast for household net worth and debt service burden. Our economic outlook assumes year-end 2024 unemployment of 4.4%, with peak unemployment at 4.6%, and GDP in the 1 to 3% range. Looking at slide 11, our common equity tier one ratio for the period was 12.7% up 80 basis points supported by core earnings and the student loan sale.
John Greene: Turning to the allowance for credit losses on Slide 10, our credit reserve balance increased $31 million from the prior quarter as a result of loan growth.
John Greene: The reserve rate was 7.18% down four basis points from the prior quarter driven by our credit performance and modest improvements in the forecast for household net worth and debt service burden.
John Greene: Our economic outlook assumes year end 'twenty 'twenty four unemployment of four 4% with peak unemployment at four 6%.
John Greene: And GDP in a 1% to 3% range.
John Green: Looking at slide 11, our common equity tier one ratio for the period was 12.7%, up 80 basis points, supported by core earnings and the student loan sale.
John Greene: Looking at Slide 11, our common equity tier one ratio for the period was 12, 7% up 80 basis points supported by core earnings and the student loan sale.
John Green: We declared a quarterly cash dividend of $0.70 per share of common stock.
John Greene: we declared a quarterly cash dividend of 70 cents per share of common.
John Greene: We declared a quarterly cash dividend of <unk> 70 cents per share of common stock.
John Greene: Yes.
John Green: Before we discuss our revised year of 2024, I would like to provide a brief regulatory update. As part of its review of the joint proxy statement and prospectus, the staff of the SEC has indicated that they disagree with certain aspects of Discovery's accounting approach for the card misclassification matter. We are working diligently to resolve their comments, which largely focus on the allocation of previously incurred card misclassification charges between revenue and expense. We do not anticipate resolution of this matter to have an impact to cumulative historical earnings capital or our counterparty restitution plan liability.
John Greene: Before we discuss our revisory of 2024, I would like to provide a brief regulatory update. As part of its review of the Joint Proxy Statement and Prospectus, the staff of the SEC has indicated that they disagree with certain aspects of Discover's accounting approach for the card misclassification matter. We are working diligently to resolve their comments, which largely focus on the allocation of previously incurred card misclassification charges between revenue and We do not anticipate resolution of this matter to have an impact to cumulative historical earnings, capital, or counterparty restitution plan liability.
John Greene: Before we discuss our revised view of 2024 I would like to provide a brief regulatory update.
John Greene: As part of its review of the joint proxy statement and prospectus. The staff of the SEC has indicated that they disagree with certain aspects of discovers accounting approach for the card Misclassification matter.
We are working diligently to resolve their comments, which largely focus on the allocation of previously incurred card misclassification charges between revenue and expense.
John Greene: We do not anticipate resolution of this matter to have an impact to cumulative historical earnings.
John Greene: Capital, where our counterparty restitution plan liability.
John Green: Including on slide 12, we have revised our 2024 outlook to reflect our latest view. We are updating our loan growth expectations to down low to mid single digits. This change is driven by a higher than anticipated payment rate and slightly lower card sales. Excluding the student loan sale, loans are estimated to grow low single digits. We are tightening our net interest margin range to 11.2 to 11.4%; our operating expense guidance is unchanged. We are tightening our range of net charge off to 4.9 to 5%, reflecting our improved credit performance. Our capital management expectations have not changed.
John Greene: concluding on slide 12. We have revised our 2024 outlook to reflect our latest view. We are updating our loan growth expectations to down low to mid single digits. This change is driven by a higher than anticipated payment rate and slightly lower card sales, excluding the student loan sale. Loans are estimated to grow low single digit. We are tightening our net interest margin range to 11.2 to 11.4%. Our operating expense guidance is unchanged. We are tightening our range of net charge-offs to 4.9% to 5%, reflecting our improved credit performance. Our capital management expectations have not changed.
John Greene: Concluding on slide 12.
John Greene: We have revised our 2024 outlook to reflect our latest view.
John Greene: We are updating our loan growth expectations to down low to mid single digits. This change is driven by a higher than anticipated payment rate and slightly lower card sales. Excluding the student loan sale loans are estimated to grow low single digits.
We are tightening our net interest margin range to 11.2 to 11, 4%.
John Greene: Our operating expense guidance is unchanged.
We are tightening our range of net charge offs to 4.925%, reflecting our improved credit performance or.
John Greene: Our capital management expectations have not changed.
John Green: In summary, we continue to deliver strong financial results, prudently manage our business, and prepare for our merger with Capital One.
John Greene: In summary, we continue to deliver strong financial results, prudently manage our business, and prepare for our merger with Capital One.
John Greene: In summary, we continue to deliver strong financial results prudently manage our business and prepare for our merger with capital one.
John Green: This concludes our remarks.
John Greene: This concludes our remarks.
John Greene: This concludes our remarks I'll turn the call back over to the operator.
Unknown Executive: I'll turn the call back over to the operator. Thank you.
Unknown Executive: I'll turn the call back over to the operator. Thank you.
Speaker Change: Thank you today's call has ended the discovery Investor Relations team will be available for your questions. Thank you for joining you may now disconnect.
Unknown Executive: Today's call has ended. The Discover Investor Relations team will be available for your questions. Thank you for joining.
Unknown Executive: Today's call has ended. The Discover Investor Relations team will be available for your questions. Thank you for joining.
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Speaker Change: [music].
Speaker Change: Yes.