Discover 2014 Annual Report Download - page 70

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-56-
The following table presents information on transaction volume (in millions):
For the Calendar Years Ended
December 31, For the Fiscal
Year Ended
November 30,
2012
For the One
Month Ended
December 31,
2012
2014 2013
Network Transaction Volume
PULSE Network ...................................................................................... $ 165,851 $ 159,805 $ 159,944 $ 14,133
Network Partners .................................................................................... 9,446 9,808 8,754 885
Diners Club(1) ......................................................................................... 26,970 26,867 28,644 2,274
Total Payment Services ........................................................................ 202,267 196,480 197,342 17,292
Discover Network—Proprietary(2) ............................................................. 119,471 113,791 109,014 10,987
Total Volume ...................................................................................... $ 321,738 $ 310,271 $ 306,356 $ 28,279
Transactions Processed on Networks
Discover Network ................................................................................... 2,020 1,947 1,844 183
PULSE Network ...................................................................................... 4,283 4,187 4,321 357
Total .................................................................................................. 6,303 6,134 6,165 540
Credit Card Volume
Discover Card Volume(3) .......................................................................... $ 125,111 $ 118,594 $ 114,213 $ 11,384
Discover Card Sales Volume(4) ................................................................. $ 115,518 $ 109,957 $ 105,454 $ 10,657
(1) Diners Club volume is derived from data provided by licensees for Diners Club branded cards issued outside North America and is subject to subsequent revision or
amendment.
(2) Represents gross proprietary sales volume on the Discover Network.
(3) Represents Discover card activity related to net sales, balance transfers, cash advances and other activity.
(4) Represents Discover card activity related to net sales.
Direct Banking
For the Year Ended December 31, 2014 compared to the Year Ended December 31, 2013
Our Direct Banking segment reported pretax income of $3.6 billion for the year ended December 31, 2014, as
compared to pretax income of $3.9 billion for the year ended December 31, 2013.
Loan receivables totaled $69.9 billion at December 31, 2014, which was up from $65.8 billion at December 31,
2013, due to growth in credit card loans and other loan portfolios partially offset by a decrease in purchased credit-
impaired ("PCI") student loan balances. The growth in credit card loans was due to growth in customers with revolving
balances partially offset by a higher net principal charge-off rate. The growth within the other loans portfolio was
primarily attributable to organic growth in personal and private student loans. Discover card sales volume was $115.5
billion for the year ended December 31, 2014, which was an increase of 5% as compared to the year ended December
31, 2013. This volume growth was driven primarily by continued growth in new accounts combined with lower
attrition.
Net interest margin increased for the year ended December 31, 2014 as compared to the year ended December
31, 2013. This was primarily driven by higher yields on total loan receivables combined with lower interest rates on
funding. The increase in loan receivable yields was driven by higher interest rates and growth in non-promotional
revolving balances, partially offset by decline in higher rate balances along with growth in credit card promotional
balances.
Interest income increased during the year ended December 31, 2014 as compared to the year ended December
31, 2013 primarily due to higher average balances of credit card loans, personal loans and private student loans
resulting from growth across these products. The increase was also attributable to higher yields on credit card loans and
PCI student loans, partially offset by a decrease in yield on personal loans along with a decrease in PCI student loan
balances.
Interest expense was relatively flat during the year ended December 31, 2014 as compared to the year ended
December 31, 2013, as lower interest expense on deposits attributable to lower yields was offset by higher interest
expense resulting from increase in borrowings.