What drove DFS's earnings surprise in 2024?

Discover Financial Services (DFS) reported a net income of $1.29 billion in 2024Q4, with an EPS surprise of $1.54, according to the latest data available. DFS's earnings surprise can be attributed to several key factors: |code|Ticker|Name|Date|Net Income|market_code| |---|---|---|---|---|---| |DFS|DFS.N|Discover Financial|2024 Q1|8.51E8|169| |DFS|DFS.N|Discover Financial|2024 Q2|1.523E9|169| |DFS|DFS.N|Discover Financial|2024 Q3|8.7E8|169| |DFS|DFS.N|Discover Financial|2024 Q4|1.291E9|169| 1. **Revenue Growth**: DFS has demonstrated strong revenue growth, with a year-over-year increase of 33%. This growth is a result of effective management of credit quality and increased loan growth. 2. **Effective Credit Quality Management**: DFS has managed credit quality effectively, with delinquency rates and net charge-off rates performing in line with or better than analyst expectations. The company has also seen a decelerating trend in the increase of both delinquency rates and net charge-off rates, indicating improved credit quality management. 3. **Strategic Portfolio Sale**: DFS completed the sale of its private student loan portfolio, resulting in financial benefits and a streamlined business model. This strategic move has likely contributed to the company's improved financial performance. 4. **Net Interest Margin Expansion**: The net interest margin expanded to 11.96% by the end of 2024Q4, up 98 basis points from the prior year. This expansion is a positive indicator of the company's profitability and reflects effective management of interest income and expenses. In conclusion, DFS's earnings surprise in 2024Q4 can be attributed to strong revenue growth, effective credit quality management, strategic portfolio sale, and expansion of net interest margin. These factors combined have contributed to the company's robust financial performance and earnings outcome.