DISCOVER FINANCIAL SERVICESd18rn0p25nwr6d.cloudfront.net/CIK-0001393612/1720... · new repurchase program will be based on market conditions and other factors, including Accounting

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Date of Report (Date of earliest event reported): July 23, 2019

DISCOVER FINANCIAL SERVICES(Exact name of registrant as specified in its charter)

Commission File Number: 001-33378

Delaware 36-2517428(State or other jurisdiction

of incorporation) (IRS Employer

Identification No.)

2500 Lake Cook Road, Riverwoods, Illinois 60015(Address of principal executive offices, including zip code)

(224) 405-0900(Registrant's telephone number, including area code)

N/A(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oo Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oo Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oo Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oo Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the ActTitle of each class Trading symbol(s) Name of each exchange on which registered

Common Stock, par value $0.01 per share DFS New York Stock Exchange

oo

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934(§240.12b-2 of this chapter).

Emerging growth company

oo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuantto Section 13(a) of the Exchange Act

Item 2.02. Results of Operations and Financial Condition.

On July 23, 2019 , Discover Financial Services (the “Company”) released financial information with respect to the quarter ended June 30, 2019 . Copies of the press release, financial data supplement and financialresults presentation containing this information are attached hereto as exhibits and incorporated herein by reference.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be "filed" for purposes of Section 18 ofthe Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or theSecurities Exchange Act of 1934, as amended, except as shall be expressly stated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description99.1 Press Release of the Company dated July 23, 2019 containing financial information for the quarter ended June 30, 201999.2 Financial Data Supplement of the Company for the quarter and the six months ended June 30, 201999.3 Financial Results Presentation of the Company for the quarter ended June 30, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DISCOVER FINANCIAL SERVICES Dated: July 23, 2019 By: /s/ D. Christopher Greene Name: D. Christopher Greene Title: Vice President, Secretary and Deputy General Counsel

EXHIBIT INDEX

Exhibit No. Description99.1 Press Release of the Company dated July 23, 2019 containing financial information for the quarter ended June 30, 201999.2 Financial Data Supplement of the Company for the quarter and the six months ended June 30, 201999.3 Financial Results Presentation of the Company for the quarter ended June 30, 2019

Exhibit 99.1

DISCOVER FINANCIAL SERVICES REPORTS SECOND QUARTER NET INCOME OF $753 MILLION

OR $2.32 PER DILUTED SHARE

Second Quarter Results

2019 2018 YOY ChangeTotal loans, end of period (in billions) $90.2 $84.8 6%Total revenue net of interest expense (in millions) $2,852 $2,603 10%Total net charge-off rate 3.22% 3.11% 11 bpsNet income (in millions) $753 $669 13%Diluted EPS $2.32 $1.91 21%

Riverwoods, IL, July 23, 2019 - Discover Financial Services (NYSE: DFS) today reported net income of $753 million or $2.32 per diluted share for the second quarter of 2019 , as compared to $669 million or $1.91 per diluted share forthe second quarter of 2018 . The company’s return on equity for the second quarter of 2019 was 26% .

“We are pleased to report another quarter of solid growth in earnings and a strong ROE, as we continue to focus on disciplined execution while delivering products and service that exceed our customers' expectations," said RogerHochschild, CEO and president of Discover. "Key drivers of our performance continue to be our investment in the Discover brand as well as delivering a differentiated customer experience, which led to our being ranked highest by J.D.Power for customer satisfaction among credit card mobile apps and websites."

Segment Results:

Direct Banking

Direct Banking pretax income of $941 million increased by $104 million from the prior year driven by higher net interest income, partially offset by an increase in the provision for loan losses and higher operating expenses.

Total loans ended the quarter at $ 90.2 billion, up 6% compared to the prior year. Credit card loans ended the quarter at $72.4 billion , up 7% from the prior year. Personal loans increased $110 million , or 2% , from the prior year. Privatestudent loans increased $273 million , or 3% , year-over-year, and grew $683 million , or 9% , excluding purchased student loans.

Net interest income increased $202 million , or 9% , from the prior year, driven by loan growth and net interest margin expansion. Net interest margin was 10.47% , up 26 basis points versus the prior year. Card yield was 13.44% , anincrease of 56 basis points from the prior year primarily due to prime rate increases and portfolio mix, partially offset by higher interest charge-offs. Interest expense as a percent of total loans increased 46 basis points from the prior year,primarily as a result of higher market rates.

Other income increased $38 million , or 10% , from the prior year, driven by higher discount and interchange revenue.

The 30+ day delinquency rate for credit card loans was 2.34% , up 18 basis points from the prior year and down 11 basis points from the prior quarter. The credit card net charge-off rate was 3.49% , up 15 basis points from the prior yearand down 1 basis point from the prior quarter. The student loan net charge-off rate, excluding PCI loans, was 0.73% , down 43 basis points from the prior year. The personal loans net charge-off rate of 4.33% increased by 36 basis pointsfrom the prior year. Net charge-off rates were generally higher due to the seasoning of recent years' loan growth and supply-driven credit normalization.

Provision for loan losses of $787 million increased $45 million from the prior year as higher net charge-offs were partially offset by a lower reserve build. The reserve build for the second quarter of 2019 was $69 million, compared to areserve build of $93 million in the second quarter of 2018.

Expenses were up $91 million from the prior year primarily as a result of increases in employee compensation, professional fees and information processing. Employee compensation increased as a result of higher average salaries andbenefits. Professional fees increased primarily due to achieving a higher level of recoveries. The increase in information processing was due to continued investments in infrastructure and analytic capabilities.

Payment Services

Payment Services pretax income was $46 million in the quarter, up $6 million from the prior year, due to higher revenue driven by transaction volume growth.

Payment Services transaction dollar volume was $61.8 billion , up 8% versus the prior year. PULSE transaction dollar volume was up 7% year-over-year, which reflects strong growth from existing issuers, the impact of new issuers on thenetwork, and expanded support for our PINless products. Network Partners volume increased by 29% from the prior year driven by AribaPay.

Share Repurchases

During the second quarter of 2019 , the company repurchased approximately 6.0 million shares of common stock for $461 million. Shares of common stock outstanding declined by 1.8% from the prior quarter.

2019 Capital Plan

On June 27, 2019, the Company announced that its capital plan for the four quarters ending June 30, 2020 contemplates share repurchases of up to $1.63 billion and an increase in the company's quarterly dividend from $0.40 to $0.44per share of common stock.

The capital plan contemplates actions that maintain capital ratios to meet regulatory and legal requirements and support the company’s funding and other capital markets activities. The timing and exact amount of repurchases under thenew repurchase program will be based on market conditions and other factors, including Accounting Standards Update 2016-13, Financial Instruments - Credit Losses, commonly known as CECL, which becomes effective on January 1,2020, and will change how financial institutions, including the company, account for expected credit losses.

Conference Call and Webcast Information

The company will host a conference call to discuss its first quarter results on Tuesday, July 23, 2019, at 4:00 p.m. Central time. Interested parties can listen to the conference call via a live audio webcast athttps://investorrelations.discover.com.

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest cardissuers in the United States. The company issues the Discover card, America's cash rewards pioneer, and offers private student loans, personal loans, home equity loans, checking and savings accounts and certificates of deposit throughits direct banking business. It operates the Discover Global Network, comprised of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners ClubInternational, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.

Contacts:

Investors:

Craig Streem, 224-405-5923

[email protected]

Media:

Jon Drummond, 224-405-1888

[email protected]

A financial summary follows. Financial, statistical, and business related information, as well as information regarding business and segment trends, is included in the financial supplement filed as Exhibit 99.2 to the company's CurrentReport on Form 8-K filed today with the Securities and Exchange Commission (“SEC”). Both the earnings release and the financial supplement are available online at the SEC's website (http://www.sec.gov) and the company's website(https://investorrelations.discover.com).

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which speak to our expected business and financial performance, among other matters,contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions. Such statements are based upon the current beliefs and expectations of the company'smanagement and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. These forward-looking statements speak only as of the date of this pressrelease, and there is no undertaking to update or revise them as more information becomes available.

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: changes in economic variables, such as the availability of consumer credit, the housing market,energy costs, the number and size of personal bankruptcy filings, the rate of unemployment, the levels of consumer confidence and consumer debt, and investor sentiment; the impact of current, pending and future legislation, regulation,supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to tax reform, financial regulatory reform, consumer financial services practices, anti-corruption, and funding, capital and liquidity; theactions and initiatives of current and potential competitors; the company's ability to manage its expenses; the company's ability to successfully achieve card acceptance across its networks and maintain relationships with networkparticipants; the company's ability to sustain and grow its non-card products; difficulty obtaining regulatory approval for, financing, closing, transitioning, integrating or managing the expenses of acquisitions of or investments in newbusinesses, products or technologies; the company's ability to manage its credit risk, market risk, liquidity risk, operational risk, compliance and legal risk, and strategic risk; the availability and cost of funding and capital; access to deposit,securitization, equity, debt and credit markets; the impact of rating agency actions; the level and volatility of equity prices, commodity prices and interest rates, currency values, investments, other market fluctuations and other marketindices; losses in the company's investment portfolio; limits on the company's ability to pay dividends and repurchase its common stock; limits on the company's ability to receive payments from its subsidiaries; fraudulent activities ormaterial security breaches of key systems; the company's ability to remain organizationally effective; the company's ability to increase or sustain Discover card usage or attract new customers; the company's ability to maintainrelationships with merchants; the effect of political, economic and market conditions, geopolitical events and unforeseen or catastrophic events; the company's ability to introduce new products or services; the company's ability to manageits relationships with third-party vendors; the company's ability to maintain current technology and integrate new and acquired systems; the company's ability to collect amounts for disputed transactions from merchants and merchantacquirers; the company's ability to attract and retain employees; the company's ability to protect its reputation and its intellectual property; and new lawsuits, investigations or similar matters or unanticipated developments related to currentmatters. The company routinely evaluates and may pursue acquisitions of or investments in businesses, products, technologies, loan portfolios or deposits, which may involve payment in cash or the company's debt or equity securities.

Additional factors that could cause the company's results to differ materially from those described in the forward-looking statements can be found under “Risk Factors,” “Business - Competition,” “Business - Supervision and Regulation”and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the company's Annual Report on Form 10-K for the year ended December 31, 2018, and “Management's Discussion & Analysis of FinancialCondition and Resultsof Operations” in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, which are filed with the SEC and available at the SEC's internet site (http://www.sec.gov).

DISCOVER FINANCIAL SERVICES Exhibit 99.2

EARNINGS SUMMARY

(unaudited, in millions, except per share statistics)

Quarter Ended Six Months Ended

Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Jun 30, 2019 vs. Jun 30, 2018 Jun 30, 2019 Jun 30, 2018 2019 vs. 2018

EARNINGS SUMMARY

Interest Income $2,977 $2,937 $2,907 $2,781 $2,636 $341 13% $5,914 $5,205 $709 14%

Interest Expense 645 632 605 558 507 138 27% 1,277 976 301 31%

Net Interest Income 2,332 2,305 2,302 2,223 2,129 203 10% 4,637 4,229 408 10%

Discount/Interchange Revenue 759 677 752 753 724 35 5% 1,436 1,370 66 5%

Rewards Cost 460 446 475 473 461 (1) —% 906 853 53 6%

Discount and Interchange Revenue, net 299 231 277 280 263 36 14% 530 517 13 3%

Protection Products Revenue 49 49 50 51 50 (1) (2%) 98 103 (5) (5%)

Loan Fee Income 102 104 108 103 95 7 7% 206 191 15 8%

Transaction Processing Revenue 48 46 46 47 42 6 14% 94 85 9 11%

Other Income 22 28 24 20 24 (2) (8%) 50 53 (3) (6%)

Total Other Income 520 458 505 501 474 46 10% 978 949 29 3% Revenue Net of Interest Expense 2,852 2,763 2,807 2,724 2,603 249 10% 5,615 5,178 437 8% Provision for Loan Losses 787 809 800 742 742 45 6% 1,596 1,493 103 7% Employee Compensation and Benefits 427 425 414 408 400 27 7% 852 805 47 6%

Marketing and Business Development 224 195 230 218 224 — —% 419 409 10 2%

Information Processing & Communications 101 99 93 89 86 15 17% 200 168 32 19%

Professional Fees 183 167 190 166 161 22 14% 350 316 34 11%

Premises and Equipment 26 28 26 26 24 2 8% 54 50 4 8%

Other Expense 117 110 157 108 89 28 31% 227 204 23 11%

Total Other Expense 1,078 1,024 1,110 1,015 984 94 10% 2,102 1,952 150 8% Income Before Income Taxes 987 930 897 967 877 110 13% 1,917 1,733 184 11%

Tax Expense 234 204 210 247 208 26 13% 438 398 40 10%

Net Income $753 $726 $687 $720 $669 $84 13% $1,479 $1,335 $144 11%

Net Income Allocated to Common Stockholders $747 $705 $681 $699 $663 $84 13% $1,452 $1,309 $143 11%

Effective Tax Rate 23.8% 21.9% 23.5% 25.5% 23.7% 22.9% 23.0% Net Interest Margin 10.47% 10.46% 10.35% 10.28% 10.21% 26 bps 10.47% 10.22% 25 bps

Operating Efficiency 37.8% 37.1% 39.6% 37.2% 37.8% — bps 37.4% 37.7% (30) bps

ROE 26% 26% 25% 26% 25% 26% 25%

Capital Returned to Common Stockholders $571 $601 $578 $580 $656 ($85) (13%) $1,172 $1,340 ($168) (13%)

Payout Ratio 76% 85% 85% 83% 99% 81% 102% Ending Common Shares Outstanding 319 325 331 338 344 (25) (7%) 319 344 (25) (7%)

Weighted Average Common Shares Outstanding 322 328 335 341 348 (26) (7%) 325 351 (26) (7%)

Weighted Average Common Shares Outstanding (fully diluted) 323 328 335 342 348 (25) (7%) 326 351 (25) (7%) PER SHARE STATISTICS

Basic EPS $2.32 $2.15 $2.04 $2.05 $1.91 $0.41 21% $4.46 $3.73 $0.73 20%

Diluted EPS $2.32 $2.15 $2.03 $2.05 $1.91 $0.41 21% $4.46 $3.72 $0.74 20%

Common Stock Price (period end) $77.59 $71.16 $58.98 $76.45 $70.41 $7.18 10% $77.59 $70.41 $7.18 10%

Book Value per share $35.97 $34.60 $33.58 $32.60 $31.66 $4.31 14% $35.97 $31.66 $4.31 14% Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICES

EARNINGS SUMMARY

(unaudited, in millions)



SEGMENT- INCOME BEFORE INCOME TAXES

Direct Banking $941 $879 $874 $923 $837 $104 12% $1,820 $1,648 $172 10%

Payment Services 46 51 23 44 40 6 15% 97 85 12 14%

Total $987 $930 $897 $967 $877 $110 13% $1,917 $1,733 $184 11%

TRANSACTIONS PROCESSED ON NETWORKS

Discover Network 671 605 663 642 614 57 9% 1,276 1,164 112 10%

PULSE Network 1,183 1,132 1,169 1,151 1,055 128 12% 2,315 2,044 271 13%

Total 1,854 1,737 1,832 1,793 1,669 185 11% 3,591 3,208 383 12%

NETWORK VOLUME

PULSE Network $47,389 $47,106 $47,082 $45,244 $44,308 $3,081 7% $94,495 $87,466 $7,029 8%

Network Partners 5,950 5,663 4,680 5,113 4,602 1,348 29% 11,613 9,155 2,458 27%

Diners Club International 1 8,472 8,278 8,700 8,370 8,417 55 1% 16,750 16,807 (57) 0%

Total Payment Services 61,811 61,047 60,462 58,727 57,327 4,484 8% 122,858 113,428 9,430 8%

Discover Network - Proprietary 37,891 34,051 38,502 36,642 36,339 1,552 4% 71,942 68,721 3,221 5%

Total $99,702 $95,098 $98,964 $95,369 $93,666 $6,036 6% $194,800 $182,149 $12,651 7%

1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment

Note: See Glossary of Financial Terms for definitions of financial terms


BALANCE SHEET SUMMARY


Quarter Ended

Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Jun 30, 2019 vs. Jun 30, 2018

BALANCE SHEET SUMMARY

Assets

Cash and Investment Securities $19,934 $21,456 $18,515 $18,410 $17,441 $2,493 14%

Total Loan Receivables 90,229 88,743 90,512 86,894 84,789 5,440 6%

Allowance for Loan Losses (3,202) (3,134) (3,041) (2,927) (2,828) (374) (13%)

Net Loan Receivables 87,027 85,609 87,471 83,967 81,961 5,066 6%

Premises and Equipment, net 1,008 980 936 896 874 134 15%

Goodwill and Intangible Assets, net 415 415 416 417 417 (2) —%

Other Assets 2,323 2,260 2,215 2,152 2,058 265 13%

Total Assets $110,707 $110,720 $109,553 $105,842 $102,751 $7,956 8%

Liabilities & Stockholders' Equity

Direct to Consumer and Affinity Deposits $49,686 $47,730 $44,669 $43,411 $42,256 $7,430 18%

Brokered Deposits and Other Deposits 20,048 21,186 23,090 20,263 19,427 621 3%

Deposits 69,734 68,916 67,759 63,674 61,683 8,051 13%

Borrowings 25,163 26,276 27,228 26,998 26,252 (1,089) (4%)

Accrued Expenses and Other Liabilities 4,317 4,269 3,436 4,154 3,927 390 10%

Total Liabilities 99,214 99,461 98,423 94,826 91,862 7,352 8%

Total Equity 11,493 11,259 11,130 11,016 10,889 604 6%

Total Liabilities and Stockholders' Equity $110,707 $110,720 $109,553 $105,842 $102,751 $7,956 8%

LIQUIDITY

Liquidity Portfolio $17,283 $20,050 $15,923 $16,370 $15,703 1,580 10%

Undrawn Credit Facilities 1 38,466 37,870 36,986 36,257 36,422 2,044 6%

Total Liquidity $55,749 $57,920 $52,909 $52,627 $52,125 $3,624 7%

1 Excludes investments pledged to the Federal Reserve, which is included within the liquidity portfolio Note: See Glossary of Financial Terms for definitions of financial terms


BALANCE SHEET STATISTICS


Quarter Ended


BALANCE SHEET STATISTICS

Total Common Equity $10,930 $10,696 $10,567 $10,453 $10,326 $604 6%

Total Common Equity/Total Assets 9.9% 9.7% 9.6% 9.9% 10.1%

Total Common Equity/Net Loans 12.6% 12.5% 12.1% 12.4% 12.6% Tangible Assets $110,292 $110,305 $109,137 $105,425 $102,334 $7,958 8%

Tangible Common Equity 1 $10,515 $10,281 $10,151 $10,036 $9,909 $606 6%

Tangible Common Equity/Tangible Assets 1 9.5% 9.3% 9.3% 9.5% 9.7%

Tangible Common Equity/Net Loans 1 12.1% 12.0% 11.6% 12.0% 12.1%

Tangible Common Equity per share 1 $32.91 $31.60 $30.63 $29.70 $28.82 $4.09 14% REGULATORY CAPITAL RATIOS Basel III Transition

Total Risk Based Capital Ratio 13.7% 13.9% 13.5% 13.9% 13.6%

Tier 1 Risk Based Capital Ratio 12.0% 12.1% 11.7% 12.1% 12.3%

Tier 1 Leverage Ratio 10.2% 10.0% 10.1% 10.4% 10.5%

Common Equity Tier 1 Capital Ratio 11.4% 11.5% 11.1% 11.4% 11.6% 1 Tangible Common Equity ("TCE") is a non-GAAP measure. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of GAAP to non-GAAP Data schedule Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICESAVERAGE BALANCE SHEET(unaudited, in millions)

Quarter Ended


AVERAGE BALANCES

Assets

Cash and Investment Securities $18,906 $18,417 $17,660 $16,474 $16,395 $2,511 15%

Restricted Cash 888 804 609 638 466 422 91%

Credit Card Loans 71,492 71,363 70,563 68,613 66,594 4,898 7%

Private Student Loans 9,464 9,654 9,344 9,158 9,219 245 3%

Personal Loans 7,419 7,468 7,540 7,460 7,304 115 2%

Other Loans 983 868 760 624 531 452 85%

Total Loans 89,358 89,353 88,207 85,855 83,648 5,710 7%

Total Interest Earning Assets 109,152 108,574 106,476 102,967 100,509 8,643 9%

Allowance for Loan Losses (3,133) (3,040) (2,924) (2,827) (2,731) (402) (15%)

Other Assets 4,539 4,455 4,520 4,377 4,170 369 9%

Total Assets $110,558 $109,989 $108,072 $104,517 $101,948 $8,610 8%

Liabilities and Stockholders' Equity

Direct to Consumer and Affinity Deposits $48,211 $45,841 $43,514 $42,498 $41,459 $6,752 16%

Brokered Deposits and Other Deposits 20,213 21,799 21,574 19,939 19,166 1,047 5%

Total Interest-bearing Deposits 68,424 67,640 65,088 62,437 60,625 7,799 13%

Short-term Borrowings — 1 2 3 1 (1) (100%)

Securitized Borrowings 15,179 15,865 16,427 16,141 16,121 (942) (6%)

Other Long-term Borrowings 10,932 10,711 10,756 10,351 9,866 1,066 11%

Total Interest-bearing Liabilities 94,535 94,217 92,273 88,932 86,613 7,922 9%

Other Liabilities & Stockholders' Equity 16,023 15,772 15,799 15,585 15,335 688 4%

Total Liabilities and Stockholders' Equity $110,558 $109,989 $108,072 $104,517 $101,948 $8,610 8%

AVERAGE RATES

Assets

Cash and Investment Securities 2.46% 2.51% 2.35% 2.01% 1.82% 64 bps

Restricted Cash 2.32% 2.35% 2.28% 1.92% 1.85% 47 bps

Credit Card Loans 13.44% 13.42% 13.20% 13.06% 12.88% 56 bps

Private Student Loans 8.59% 8.63% 8.31% 8.19% 8.05% 54 bps

Personal Loans 13.02% 12.86% 12.76% 12.66% 12.55% 47 bps

Other Loans 6.83% 6.85% 6.57% 6.38% 6.02% 81 bps

Total Loans 12.82% 12.79% 12.59% 12.45% 12.28% 54 bps

Total Interest Earning Assets 10.94% 10.97% 10.83% 10.72% 10.52% 42 bps

Liabilities and Stockholders' Equity

Direct to Consumer and Affinity Deposits 2.20% 2.15% 2.00% 1.88% 1.71% 49 bps

Brokered Deposits and Other Deposits 2.71% 2.67% 2.58% 2.51% 2.33% 38 bps

Total Interest-bearing Deposits 2.35% 2.32% 2.20% 2.08% 1.90% 45 bps

Short-term Borrowings 2.59% 2.59% 2.42% 2.09% 1.89% 70 bps

Securitized Borrowings 3.01% 3.05% 2.87% 2.71% 2.67% 34 bps

Other Long-term Borrowings 4.75% 4.81% 4.65% 4.56% 4.57% 18 bps

Total Interest-bearing Liabilities 2.73% 2.72% 2.60% 2.49% 2.35% 38 bps

Net Interest Margin 10.47% 10.46% 10.35% 10.28% 10.21% 26 bps

Net Yield on Interest-earning Assets 8.57% 8.61% 8.57% 8.57% 8.50% 7 bps



LOAN STATISTICS




TOTAL LOAN RECEIVABLES

Ending Loans 1, 2 $90,229 $88,743 $90,512 $86,894 $84,789 $5,440 6% $90,229 $84,789 $5,440 6%

Average Loans 1, 2 $89,358 $89,353 $88,207 $85,855 $83,648 $5,710 7% $89,356 $83,452 $5,904 7% Interest Yield 12.82% 12.79% 12.59% 12.45% 12.28% 54 bps 12.81% 12.24% 57 bps

Gross Principal Charge-off Rate 4.03% 4.02% 3.77% 3.63% 3.78% 25 bps 4.03% 3.76% 27 bps

Gross Principal Charge-off Rate excluding PCI Loans 3 4.10% 4.10% 3.85% 3.71% 3.87% 23 bps 4.10% 3.85% 25 bps

Net Principal Charge-off Rate 3.22% 3.25% 3.08% 2.97% 3.11% 11 bps 3.23% 3.10% 13 bps

Net Principal Charge-off Rate excluding PCI Loans 3 3.27% 3.31% 3.14% 3.03% 3.18% 9 bps 3.29% 3.18% 11 bps

Delinquency Rate (30 or more days) excluding PCI Loans 3 2.18% 2.28% 2.31% 2.22% 2.08% 10 bps 2.18% 2.08% 10 bps

Delinquency Rate (90 or more days) excluding PCI Loans 3 1.04% 1.10% 1.08% 1.00% 0.99% 5 bps 1.04% 0.99% 5 bps

Gross Principal Charge-off Dollars $898 $887 $839 $785 $789 $109 14% $1,785 $1,558 $227 15%

Net Principal Charge-off Dollars $718 $715 $686 $642 $649 $69 11% $1,433 $1,284 $149 12%

Net Interest and Fee Charge-off Dollars $158 $158 $142 $135 $138 $20 14% $316 $274 $42 15%

Loans Delinquent 30 or more days 3 $1,939 $1,988 $2,049 $1,894 $1,725 $214 12% $1,939 $1,725 $214 12%

Loans Delinquent 90 or more days 3 $922 $959 $961 $854 $821 $101 12% $922 $821 $101 12% Allowance for Loan Loss (period end) $3,202 $3,134 $3,041 $2,927 $2,828 $374 13% $3,202 $2,828 $374 13%

Reserve Change Build/ (Release) 4 $69 $94 $114 $100 $93 ($24) $163 $209 ($46)

Reserve Rate 3.55% 3.53% 3.36% 3.37% 3.34% 21 bps 3.55% 3.34% 21 bps

Reserve Rate Excluding PCI Loans 3 3.58% 3.57% 3.39% 3.41% 3.38% 20 bps 3.58% 3.38% 20 bps CREDIT CARD LOANS

Ending Loans $72,393 $70,789 $72,876 $69,253 $67,812 $4,581 7% $72,393 $67,812 $4,581 7%

Average Loans $71,492 $71,363 $70,563 $68,613 $66,594 $4,898 7% $71,428 $66,290 $5,138 8% Interest Yield 13.44% 13.42% 13.20% 13.06% 12.88% 56 bps 13.43% 12.87% 56 bps

Gross Principal Charge-off Rate 4.43% 4.40% 4.01% 3.90% 4.12% 31 bps 4.41% 4.10% 31 bps


Delinquency Rate (30 or more days) 2.34% 2.45% 2.43% 2.32% 2.16% 18 bps 2.34% 2.16% 18 bps


Gross Principal Charge-off Dollars $789 $774 $713 $674 $684 $105 15% $1,563 $1,347 $216 16%

Net Principal Charge-off Dollars $623 $616 $575 $543 $555 $68 12% $1,239 $1,095 $144 13%

Loans Delinquent 30 or more days $1,692 $1,731 $1,772 $1,608 $1,466 $226 15% $1,692 $1,466 $226 15%

Loans Delinquent 90 or more days $857 $891 $887 $777 $743 $114 15% $857 $743 $114 15% Allowance for Loan Loss (period end) $2,691 $2,622 $2,528 $2,424 $2,334 $357 15% $2,691 $2,334 $357 15%

Reserve Change Build/ (Release) $69 $94 $104 $90 $82 ($13) $163 $187 ($24)

Reserve Rate 3.72% 3.70% 3.47% 3.50% 3.44% 28 bps 3.72% 3.44% 28 bps Total Discover Card Volume $39,935 $36,386 $40,655 $39,414 $38,430 $1,505 4% $76,321 $72,757 $3,564 5%

Discover Card Sales Volume $36,664 $32,899 $37,208 $35,896 $35,077 $1,587 5% $69,563 $65,927 $3,636 6%

Rewards Rate 1.25% 1.35% 1.28% 1.31% 1.31% (6) bps 1.30% 1.29% 1 bps 1 Total Loans includes Home Equity and other loans 2 Purchased Credit Impaired ("PCI") loans are loans that were acquired in which a deterioration in credit quality occurred between the origination date and the acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the loans are contractually past due. PCI loans are privatestudent loans and are included in total loan receivables 3 Excludes PCI loans (described above) which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the Company is recognizing interest income on a pool of loans, it is all considered to beperforming 4 Allowance for loan loss includes the net change in reserves on PCI pools having no remaining non-accretable difference which does not impact the reserve change build/(release) in provision for loan losses Note: See Glossary of Financial Terms for definitions of financial terms


LOAN STATISTICS




PRIVATE STUDENT LOANS

Ending Loans (excluding PCI) $7,943 $8,071 $7,728 $7,668 $7,260 $683 9% $7,943 $7,260 $683 9%

Ending PCI Loans 1 1,432 1,531 1,637 1,735 1,842 (410) (22%) 1,432 1,842 (410) (22%)

Ending Loans $9,375 $9,602 $9,365 $9,403 $9,102 $273 3% $9,375 $9,102 $273 3%

Interest Yield 8.59% 8.63% 8.31% 8.19% 8.05% 54 bps 8.61% 7.97% 64 bps

Net Principal Charge-off Rate 0.61% 0.66% 0.86% 0.96% 0.92% (31) bps 0.64% 0.92% (28) bps

Net Principal Charge-off Rate excluding PCI Loans 2 0.73% 0.79% 1.05% 1.19% 1.16% (43) bps 0.76% 1.17% (41) bps

Delinquency Rate (30 or more days) excluding PCI Loans 2 1.67% 1.76% 2.00% 2.13% 2.10% (43) bps 1.67% 2.10% (43) bps

Reserve Rate 1.79% 1.75% 1.80% 1.80% 1.87% (8) bps 1.79% 1.87% (8) bps

Reserve Rate excluding PCI Loans 2 1.80% 1.78% 1.85% 1.87% 1.97% (17) bps 1.80% 1.97% (17) bps

PERSONAL LOANS

Ending Loans $7,414 $7,428 $7,454 $7,545 $7,304 $110 2% $7,414 $7,304 $110 2%

Interest Yield 13.02% 12.86% 12.76% 12.66% 12.55% 47 bps 12.94% 12.49% 45 bps



Reserve Rate 4.56% 4.55% 4.53% 4.28% 4.29% 27 bps 4.56% 4.29% 27 bps

1 Purchased Credit Impaired ("PCI") loans are loans that were acquired in which a deterioration in credit quality occurred between the origination date and the acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the loans are contractually pastdue. PCI loans are private student loans and are included in total loan receivables

2 Excludes PCI loans (described above) which are accounted for on a pooled basis. Since a pool is accounted for as a single asset with a single composite interest rate and aggregate expectation of cash flows, the past-due status of a pool, or that of the individual loans within a pool, is not meaningful. Because the Company is recognizing interest income on a pool of loans, it isall considered to be performing



SEGMENT RESULTS




DIRECT BANKING

Interest Income $2,976 $2,937 $2,906 $2,781 $2,636 $340 13% $5,913 $5,205 $708 14%

Interest Expense 645 632 605 558 507 138 27% 1,277 976 301 31%

Net Interest Income 2,331 2,305 2,301 2,223 2,129 202 9% 4,636 4,229 407 10%

Other Income 436 372 432 421 398 38 10% 808 792 16 2%

Revenue Net of Interest Expense 2,767 2,677 2,733 2,644 2,527 240 9% 5,444 5,021 423 8%

Provision for Loan Losses 787 809 800 742 742 45 6% 1,596 1,493 103 7%

Total Other Expense 1,039 989 1,059 979 948 91 10% 2,028 1,880 148 8%

Income Before Income Taxes $941 $879 $874 $923 $837 $104 12% $1,820 $1,648 $172 10%

Net Interest Margin 10.47% 10.46% 10.35% 10.28% 10.21% 26 bps 10.47% 10.22% 25 bps

Pretax Return on Loan Receivables 4.23% 3.99% 3.93% 4.27% 4.01% 22 bps 4.11% 3.98% 13 bps Allowance for Loan Loss (period end) $3,200 $3,133 $3,039 $2,920 $2,821 $379 13% $3,200 $2,821 $379 13%

Reserve Change Build/ (Release) 1 $69 $94 $120 $100 $93 ($24) $163 $209 ($46)

PAYMENT SERVICES

Interest Income $1 $— $1 $— $— $1 NM $1 $— $1 NM

Interest Expense — — — — — — NM — — — NM

Net Interest Income 1 — 1 — — 1 NM 1 — 1 NM

Other Income 84 86 73 80 76 8 11% 170 157 13 8%

Revenue Net of Interest Expense 85 86 74 80 76 9 12% 171 157 14 9%

Provision for Loan Losses — — — — — — NM — — — NM

Total Other Expense 39 35 51 36 36 3 8% 74 72 2 3%

Income Before Income Taxes $46 $51 $23 $44 $40 $6 15% $97 $85 $12 14%

1 Allowance for loan loss includes the net change in reserves on PCI pools having no remaining non-accretable difference which does not impact the reserve change build/(release) in provision for loan losses Note: See Glossary of Financial Terms for definitions of financial terms

DISCOVER FINANCIAL SERVICESGLOSSARY OF FINANCIAL TERMS Book Value per share represents total equity divided by ending common shares outstanding Capital Returned to Common Stockholders represents common stock dividends declared plus treasury share repurchases minus common stock issued under employee benefit plans and stock based compensation

Common Equity Tier 1 Capital Ratio (Basel III transition) represents common equity tier 1 capital divided by risk weighted assets calculated under Basel III rules subject to transition provisions

Delinquency Rate (30 or more days) represents loans delinquent thirty days or more divided by ending loans (total or respective loans, as appropriate ) Delinquency Rate (90 or more days) represents loans delinquent ninety days or more divided by ending loans (total or respective loans, as appropriate)

Discover Card Sales Volume represents Discover card activity related to net sales

Discover Card Volume represents Discover card activity related to net sales, balance transfers, cash advances and other activity

Discover Network Proprietary Volume represents gross proprietary sales volume on the Discover Network

Earnings Per Share represents net income allocated to common stockholders divided by the weighted average common shares outstanding Effective Tax Rate represents tax expense divided by income before income taxes Gross Principal Charge-off Rate represents gross principal charge-off dollars (annualized) divided by average loans for the reporting period

Interest Yield represents interest income on loan receivables (annualized) divided by average loans for the reporting period Liquidity Portfolio represents cash and cash equivalents (excluding cash-in-process) and other investments Net Income Allocated to Common Stockholders represents net income less (i) dividends and accretion of discount on shares of preferred stock and (ii) income allocated to participating securities Net Interest Margin represents net interest income (annualized) divided by average total loans for the period Net Principal Charge-off Rate represents net principal charge-off dollars (annualized) divided by average loans for the reporting period

Operating Efficiency represents total other expense divided by revenue net of interest expense Payout Ratio represents capital returned to common stockholders divided by net income allocated to common stockholders

Pretax Return on Loan Receivables represents income before income taxes (annualized) divided by total average loans for the period Proprietary Network Volume represents gross proprietary sales volume on the Discover Network

Regulatory Capital Ratios are regulatory measures used to evaluate capital adequacy. Under Basel III, for a Bank Holding Company to be considered "well-capitalized," total risk-based and tier 1 risk-based capital ratios of 10% and 6% respectively must be maintained. Under Basel III, to meet the regulatory minimum a Bank Holding Company must maintain total risk-based, tier 1 risk-based, tier 1 leverage, and common equity tier 1 ratios of 8%, 6%, 4%, and 4.5% respectively. As of January 1, 2015 regulatory capital ratios are calculated under Basel III rules subject to transition provisions. Total Risk Based Capital Ratio represents total capital divided by risk-weighted assets. Tier 1 Capital Ratio represents tier 1 capital divided by risk-weighted assets. Tier 1 Leverage Ratio represents tier 1 capital divided by average total assets. The Tier 1 Common Capital Ratio has been replaced by the Common Equity Tier 1 Ratio under Basel III Reserve Rate represents the allowance for loan losses divided by total loans Return on Equity represents net income (annualized) divided by average total equity for the reporting period Rewards Rate represents rewards cost divided by Discover Card sales volume

Tangible Assets represents total assets less goodwill and intangibles Tangible Common Equity ("TCE") , a non-GAAP financial measure, represents total common equity less goodwill and intangibles. The Company believes TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of GAAP to Non-GAAP data schedule Tangible Common Equity/Net Loans , a non-GAAP measure, represents total common equity less goodwill and intangibles divided by total loans less the allowance for loan loss (period end) Tangible Common Equity per Share , a non-GAAP measure, represents total common equity less goodwill and intangibles divided by ending common shares outstanding Tangible Common Equity/Tangible Assets , a non-GAAP measure, represents total common equity less goodwill and intangibles divided by total assets less goodwill and intangibles

Total Volume represents the transaction dollar volume from the PULSE network, Network Partners, Diners Club and proprietary Discover Network Undrawn Credit Facilities represents asset-backed conduit funding facilities and Federal Reserve discount window (excluding investments pledged to the Federal Reserve, which are included within the liquidity investment portfolio)

DISCOVER FINANCIAL SERVICESRECONCILIATION OF GAAP TO NON-GAAP DATA(unaudited, in millions) Quarter Ended

Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018

GAAP Total Common Equity $10,930 $10,696 $10,567 $10,453 $10,326

Less: Goodwill (255) (255) (255) (255) (255)

Less: Intangibles (160) (160) (161) (162) (162)

Tangible Common Equity 1 $10,515 $10,281 $10,151 $10,036 $9,909

GAAP Book Value Per Share $35.97 $34.60 $33.58 $32.60 $31.66

Less: Goodwill (0.80) (0.78) (0.77) (0.76) (0.73)

Less: Intangibles (0.50) (0.49) (0.48) (0.48) (0.47)

Less: Preferred Stock (1.76) (1.73) (1.70) (1.66) (1.64)

Tangible Common Equity Per Share $32.91 $31.60 $30.63 $29.70 $28.82

1 Tangible Common Equity ("TCE"), a non-GAAP financial measure, represents common equity less goodwill and intangibles. A reconciliation of TCE to common equity, a GAAP financial measure, is shown above. Other financial services companies may also use TCE anddefinitions may vary, so users of this information are advised to exercise caution in comparing TCE of different companies. TCE is included because management believes that common equity excluding goodwill and intangibles is a more meaningful measure to investors of thetrue net asset value of the Company


Exhibit 99.3 2Q19 Financial Results July 23, 2019 ©2019 DISCOVER FINANCIAL SERVICES

Notice The following slides are part of a presentation by Discover Financial Services (the "Company") in connection with reporting quarterly financial results and are intended to be viewed as part of that presentation. No representation is made that the information in these slides is complete. For additional financial, statistical, and business related information, as well as information regarding business and segment trends, see the earnings release and financial supplement included as exhibits to the Company’s Current Report on Form 8-K filed today and available on the Company’s website (www.discover.com) and the SEC’s website (www.sec.gov). The presentation contains forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s estimates, projections, expectations or beliefs at that time, and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of certain risks and uncertainties that may affect the future results of the Company, please see "Special Note Regarding Forward-Looking Statements," "Risk Factors," "Business – Competition," "Business – Supervision and Regulation" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and "Management’s Discussion & Analysis of Financial Condition and Results of Operations" in the company's Quarterly Report on Form 10- Q for the quarter ended March 31, 2019, which are filed with the SEC and available at the SEC's website (www.sec.gov). The Company does not undertake to update or revise forward-looking statements as more information becomes available. 2

2Q19 Highlights(1) • Net income of $753MM, diluted EPS of $2.32; return on equity of 26% • Total loan growth of 6% led by an 7% increase in credit card loans; revenue growth of 10% • Strong credit performance reflecting disciplined underwriting and continued investments in collection capabilities • Payment Services continued to drive strong network volume growth (up 8%) • Investments in technology as well as our customer focus led to the highest ranking by J.D. Power in customer satisfaction among credit card mobile apps and websites • Returned $571MM of capital through dividends and share repurchases; announced capital plan which includes dividend increase and share repurchases Note(s) (1) All comparisons stated on a year-over-year basis 3

2Q19 Summary Financial Results Highlights Inc / (Dec) ($MM, except per share data) 2Q19 2Q18 $ % Revenue Net of Interest Expense $2,852 $2,603 $249 10% • Revenue net of interest expense of $2.9Bn, up 10%, driven by higher net Net Principal Charge-off 718 649 69 11% interest income Reserve Change 69 93 (24) (26%) Provision for Loan Losses 787 742 45 6% • Provision for loan losses increased Operating Expense 1,078 984 94 10% $45MM, or 6%, on higher net charge- offs, partially offset by a lower reserve Total Pre-Tax Income 987 877 110 13% build Income Tax Expense 234 208 26 13% • Expenses rose 10%, primarily driven Net Income $753 $669 $84 13% by higher compensation expense, as well as investments to support growth Segment Pre-Tax Income and new capabilities Direct Banking $941 $837 $104 12% Payment Services 46 40 6 15% • Diluted EPS of $2.32, up 21% Total Pre-Tax Income $987 $877 $110 13% ROE 26% 25% Diluted EPS $2.32 $1.91 $0.41 21% 4

2Q19 Loan and Volume Growth Ending Loans ($Bn) Volume ($Bn) Payment Services Network (1) Total Card Student Personal Proprietary PULSE Diners Partners +6% +7% +3% +2% +4% +7% +1% +29% $90.2 $84.8 $72.4 $67.8 $47.4 $44.3 $36.3$37.9 $9.1 $9.4 $7.4 $8.4 $8.5 $7.3 $4.6 $6.0 2Q18 2Q19 2Q18 2Q19 Total Network Volume up 6% YOY Note(s) 1. Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment 5

2Q19 Revenue Inc / (Dec) Highlights ($MM) 2Q19 2Q18 $ % Interest Income $2,977 $2,636 $341 13% • Loan growth and higher net Interest Expense 645 507 138 27% interest margin drove 10% Net Interest Income 2,332 2,129 203 10% increase in net interest income Discount/Interchange Revenue 759 724 35 5% Rewards Cost 460 461 (1) —% • Net discount and interchange Net Discount/Interchange Revenue 299 263 36 14% revenue increased 14% driven by Protection Products Revenue 49 50 (1) (2%) increased Card sales volume Loan Fee Income 102 95 7 7% while rewards cost remained flat Transaction Processing Revenue 48 42 6 14% Other Income 22 24 (2) (8%) • Rewards rate down 6 bps YOY Total Non-Interest Income 520 474 46 10% reflecting a shift in the 5% Revenue Net of Interest Expense $2,852 $2,603 $249 10% category (gas, Uber, Lyft in 2Q19 vs. groceries in 2Q18) Segment Revenue Net of Interest Expense Direct Banking $2,767 $2,527 $240 9% Payment Services 85 76 9 12% Revenue Net of Interest Expense $2,852 $2,603 $249 10% Change ($MM) 2Q19 2Q18 QOQ YOY Discover Card Sales Volume $36,664 $35,077 11% 5% Rewards Rate (1) 1.25% 1.31% -10 bps -6 bps Note(s) 1. Rewards cost divided by Discover card sales volume 6

2Q19 Net Interest Margin 2Q19 2Q18 Highlights Average Average ($MM) Balance Rate Balance Rate • Net interest margin on loans up 26 Credit Card $71,492 13.44% $66,594 12.88% Private Student 9,464 8.59% 9,219 8.05% bps as higher loan yields were Personal 7,419 13.02% 7,304 12.55% partially offset by higher funding costs Other 983 6.83% 531 6.02% Total Loans 89,358 12.82% 83,648 12.28% • Credit card yield increased 56 bps Other Interest-Earning Assets 19,794 2.45% 16,861 1.81% due to prime rate increases and Total Interest-Earning Assets $109,152 10.94% $100,509 10.52% portfolio mix, partially offset by higher Direct to Consumer and Affinity $48,211 2.20% $41,459 1.71% interest charge-offs Brokered Deposits and Other 20,213 2.71% 19,166 2.33% Interest Bearing Deposits 68,424 2.35% 60,625 1.90% • Average consumer deposits grew Borrowings 26,111 3.74% 25,988 3.39% 16% and composed 51% of total Total Interest-Bearing Liabilities $94,535 2.73% $86,613 2.35% funding Change • Funding costs on interest-bearing (%) 2Q19 QOQ YOY Total Interest Yield on Loans 12.82% 3bps 54bps liabilities increased 38 bps, primarily NIM on Loans 10.47% 1bps 26bps driven by higher market rates NIM on Interest-Earning Assets 8.57% -4bps 7bps 7

2Q19 Operating Expense Inc / (Dec) Highlights ($MM) 2Q19 2Q18 $ % Employee Compensation and Benefits $427 $400 $27 7% • Employee compensation and benefits Marketing and Business Development 224 224 0 —% up 7%, primarily due to higher Information Processing & Communications 101 86 15 17% average salaries and benefits Professional Fees 183 161 22 14% Premises and Equipment 26 24 2 8% Other Expense 117 89 28 31% • Information processing up 17% due to Total Operating Expense $1,078 $984 $94 10% investments in infrastructure and analytic capabilities Segment Operating Expense Direct Banking 1,039 948 $91 10% • Professional fees up 14%, primarily Payment Services 39 36 3 8% Total Operating Expense $1,078 $984 $94 10% related to achieving a higher level of recoveries Operating Efficiency(1) 37.8% 37.8% — bps Note(s) 1. Defined as reported total operating expense divided by revenue net of interest expense 8

Credit Performance Trends Total Company Loans Credit Card Loans 3.32 3.34 3.50 3.49 3.09 3.11 3.08 3.25 3.22 3.14 3.23 2.85 2.97 2.84 2.94 3.03 2.60 2.71 2.63 2.80 2.43 2.45 2.20 2.23 2.22 2.31 2.28 2.18 2.28 2.33 2.16 2.32 2.34 1.97 1.93 2.05 2.08 2.06 2.00 2.14 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 NCO rate (%) 30+ day DQ rate ex-PCI (%) NCO rate (%) 30+ day DQ rate (%) Private Student Loans Personal Loans 4.49 4.53 4.33 4.03 3.97 4.09 3.62 3.16 3.18 3.19 2.35 2.25 2.04 2.12 2.14 2.10 2.13 2.00 1.76 1.67 1.14 1.40 1.37 1.42 1.57 1.60 1.51 1.49 0.85 1.03 0.92 0.92 0.96 0.86 1.12 1.14 1.27 0.60 0.66 0.61 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 NCO rate (%) 30+ day DQ rate ex-PCI (%) NCO rate (%) 30+ day DQ rate (%) 9

Capital Trends 13.0 12.5 11.9 11.6 11.6 11.4 11.5 11.4 11.1 123 120 118 108 109 109 93 88 82 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Common Equity Tier 1 (CET1) Capital Ratio(1) (%) Payout Ratio(2) (%) Note(s) 1. Common Equity Tier 1 Capital Ratio (Basel III Transition) 2. Payout Ratio is displayed on a trailing twelve month basis. This represents the trailing twelve months’ Capital Return to Common Stockholders divided by the trailing twelve months’ Net Income Allocated to Common Stockholders 10

2Q19 Financial Summary Balance Sheet Credit and Capital Profitability • Total loans grew 6% • Total NCO rate of 3.22%, • Net income of $753MM ($5.4Bn) YOY up 11 bps YOY and diluted EPS of $2.32 • Reflects loan seasoning • Credit card loans grew 7% and supply-driven credit • Revenue growth of 10% ($4.6Bn) YOY as sales normalization on higher net interest volume increased 5% income • Capital return • Average consumer • Raised quarterly • NIM of 10.47%, up 26 bps deposits grew 16% common dividend to YOY ($6.8Bn) YOY, while $0.44/share deposit rates increased 49 • Planned share • Strong return on equity at bps repurchases up to $1.63Bn over four 26% quarters ending June 30, 2020 • CET1 capital ratio(1) of 11.4% down 20 bps YOY Note(s) 1. Basel III Transition 11

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DISCOVER FINANCIAL SERVICESd18rn0p25nwr6d.cloudfront.net/CIK-0001393612/1720... · new repurchase program will be based on market conditions and other factors, including Accounting