Moody’s eyes Discover for upgrade

Moody’s Investors Service said it placed on review for upgrade all of the long-term ratings and assessments of Discover Financial Services, including its long-term senior unsecured Baa3, and its bank subsidiary, Discover Bank, including its long-term unsecured debt Baa2.

“DFS' strong market position drives its very strong profitability, one of the highest amongst Moody's-rated US banks with a return on assets averaging (ROAA) well above 2% since 2011. The company's strong profitability also provides additional support for the firm's solid capital levels,” Moody’s said in a press release.

The agency noted that DFS’ delinquencies fell to 1.9% compared with 2.3% for the same period in 2019 and charge-offs were 1.7% annualized in Q3 2022 compared with 3.1% for the same period in 2019.

“Along with other credit card lenders, Moody's expects DFS' delinquencies and charge-offs to continue to increase and reach 2019 levels by mid-2023. Year,” the agency said.

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