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.
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.
“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.