Discover Financial Services plans to slash costs by $400m this year as the coronavirus (Covid-19) pandemic affected its Q1 2020 performance, Bloomberg reported.
The company tightened underwriting strategies for new accounts and discontinued balance-transfer offers.
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The Illinois-based company reported a net loss of $61m or $0.25 per diluted share for Q1 2020.
Its provision for loan losses increased to $1.81bn.
The firm’s card reserve rate increased to 7.2% from 3.7% on a year-on-year basis.
Commenting on the performance, Discover CEO Roger Hochschild said: “Our results this quarter were heavily impacted by the emerging effects of the coronavirus.
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By GlobalData“I believe our digital business model, strong capital position and robust funding channels will allow us to operate effectively during the downturn and position us well for the recovery.”
Discover witnessed a 33% slump on discretionary item spending so far in April compared to the previous year, while spending on everyday items dropped 14%.
Apart from the planned expense reduction, Discover has taken several measures in response to the Covid-19 pandemic.
The financial services giant has enabled all of its employees to work from home and established “Skip-a-Payment” programmes for affected customers.
It also suspended the share repurchase programme and implemented actions to lower the impact of the pandemic on future credit performance.
