Discover 2010 Annual Report Download - page 76

The following table presents information on transaction volume (in thousands):
For the Years Ended November 30,
2010 2009 2008
Network Transaction Volume
PULSE network .............................................................................................................................. $118,178,821 $109,302,121 $106,012,108
Third-Party Issuers.......................................................................................................................... 6,802,480 5,671,555 6,398,579
Diners Club(1) ................................................................................................................................ 27,132,901 26,172,977 12,685,690
Total Payment Services ................................................................................................................ 152,114,202 141,146,653 125,096,377
Discover Network – Proprietary(2) ..................................................................................................... 95,759,835 90,688,997 95,688,443
Total Volume.............................................................................................................................. $247,874,037 $231,835,650 $220,784,820
Transactions Processed on Networks
Discover Network .......................................................................................................................... 1,605,114 1,513,955 1,515,368
PULSE network .............................................................................................................................. 3,308,543 2,878,720 2,682,312
Total...................................................................................................................................... 4,913,657 4,392,675 4,197,680
Credit Card Volume
Discover Card Volume(3).................................................................................................................. $ 98,698,861 $ 95,592,170 $105,734,055
Discover Card Sales Volume(4) ......................................................................................................... $ 92,470,523 $ 87,460,552 $ 92,239,779
(1) Diners Club was acquired on June 30, 2008. 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 fee-based products.
(4) Represents Discover card activity related to net sales.
Direct Banking
For the Year Ended November 30, 2010 compared to the Year Ended November 30, 2009
Our Direct Banking segment had pretax income of $1.1 billion for the year ended November 30, 2010 as compared
to a reported pretax income of $2.0 billion (which included $1.9 billion in income from the settlement of our antitrust
litigation) and an as adjusted pretax loss of $436 million for the year ended 2009.
Discover card sales volume was up for the year ended November 30, 2010 as compared to 2009 reflecting higher
average spend per customer and a continued increase in merchant acceptance. Loan receivables totaled $48.8 billion at
November 30, 2010, which was down from $50.9 billion at November 30, 2009 as adjusted, reflecting a decline in
credit card loans and federal student loans, partially offset by an increase in personal loans and private student loans.
Although sales volumes increased, credit card loans declined as a result of a reduction in promotional rate balances and
an increase in the payment rate. In 2010, we sold $1.5 billion in federal student loans to the U.S. Department of
Education and classified the remaining $788 million of federal student loan balances as held for sale.
Net interest income declined during 2010 as compared to 2009 as adjusted, largely due to a decline in the average
level of credit card loan receivables as well as a lower net interest margin. The decline in net interest margin is reflective
of the impact of legislative changes on credit card yield and an increase in the average level of lower rate student loan
balances, partially offset by higher interest rates earned on standard balances and fewer promotional rate balances.
At November 30, 2010, our over 30 days delinquency rate was 3.89% as compared to 5.31% at November 30, 2009
as adjusted, reflective of continued improvement in credit performance. For the year ended November 30, 2010, our net
charge-off rate declined to 7.57%, compared to 7.77% for the year ended November 30, 2009 as adjusted. A reduction
in the loan loss reserve rate and a decline in the level of net charge-offs led to a decline in the provision for loan losses for
the year ended November 30, 2010 as compared to 2009 as adjusted. For a more detailed discussion on provision for
loan losses, see “ – Loan Quality – Provision and Allowance for Loan Losses.”
Other income decreased in 2010 as compared to 2009 as adjusted primarily due to the discontinuance of overlimit
fees on consumer credit card loans beginning in February 2010 and a decline in late fees beginning in August 2010 in
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