Discover Agrees to Be Acquired by Capital One
After a period of unusually strong results from high loan growth and low net charge-offs industrywide, Discover will face a more difficult operating environment in 2024. While credit costs had initially normalized from their postpandemic lows slower than we had expected, they increased materially in 2023 and we expect them to rise further in 2024. This will reduce the bank's returns in the near term and likely lead to tighter underwriting and lower loan growth.