Discover Financial Services on Thursday said it expects to post a loss for its fiscal first quarter after setting aside more funds to cover soured loans.
The credit-card company expects a first-quarter loss of 22 cents per share to 23 cents per share. Analysts polled by Thomson Reuters expected earnings of 9 cents per share.
Discover boosted its reserves to cover unpaid loans by $305 million before taxes.
The company also said it expects its first-quarter net principal charge-off rate for its direct banking segment to rise to 8.5 percent from 8.43 percent in the fourth quarter of 2009. The charge-off rate refers to loans the company no longer expects will be repaid.
The company's over-30 day delinquency rate, a good predictor of future charge-offs, is expected to be 5 percent in the quarter. That's 0.25 percentage points lower than the fourth quarter of 2009. Discover believes delinquent loan balances may have peaked in the last quarter of 2009.
The company will post full quarterly results after the market closes on Tuesday.
Its shares fell 57 cents, or 3.8 percent, to $14.35 in trading after hours Thursday after ending the regular session at $14.92.
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