Discover Financial Services

Please stand by. Your program is about to begin. Good morning. My name is Todd and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and full year 2022 Discover Financial Services earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question at that time, please press star one on your telephone keypad. If you should need operator assistance, please press star zero. Thank you. I will now turn the call over to Mr. Eric Wasserstrom, head of investor relations. Please go ahead.

Thanks, Todd. Good morning, everyone. Welcome to today's call. I'll begin on slide two of the earnings presentation, which you can find in the financial section of our investor relations website, investorrelations.discover.com. Our discussion today contains certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in the fourth quarter earnings press release and presentation. On our call today, we'll include remarks from our CEO, Roger Hochschild, and John Green, our chief financial officer. After we conclude our formal comments, there will be time for a question and answer session. During the Q&A session, you'll be permitted to ask one question followed by one follow-up question. After your follow-up question, please return to the queue. And with that, it's my pleasure to turn the call over to Roger.

Thanks, Eric, and thanks to our listeners for joining today's call. I want to begin by reviewing the highlights and key metrics for the year, and then John will take you through the details of our fourth quarter results and our perspectives on 2023. I'm very pleased to say that 2022 was the second strongest year for earnings in our company's history. We reported net income of $1 billion, or $3.77 per share for the fourth quarter, and $4.4 billion, or $15.50 per share, for the full year. This was accomplished against a fluid and unusual macroeconomic and monetary policy backdrop, and I want to thank the entire Discover team for their solid execution. This performance gives us significant momentum going into 2023 and beyond. I want to give a few highlights that underscore these strong results. First, we grew new accounts by 23% and loan receivables by 20%. This demonstrates the appeal of our consumer value proposition and advancements in our consumer targeting and acquisition capabilities while maintaining our conservative approach to underwriting and credit management. We're also prudently investing for growth, including in acquisition and brand marketing, the continuing build-out of our data and analytic capabilities, and increasing field personnel for both servicing and collections, all while achieving a 39% efficiency ratio. The combination of revenue expansion and disciplined cost management contributed to our 31% return on equity this past year and underscores the highly capital generative nature of our business model. Over the course of 2022, we repurchased $2.4 billion in common stock and increased our dividend by over 20%. And we expect to sustain attractive levels of capital return to our shareholders into the future. As we look into 2023, we expect a less favorable macroeconomic backdrop. Nevertheless, we intend to maintain an appropriate level of investment in our organization. For example, we have several initiatives that will improve our digital marketing capabilities, and we anticipate the broad market launch for our mass market cashback debit product. And of course, we'll continue to invest in our brand and in account acquisition in a manner consistent with the environment. We're very aware of the climate in which we are operating, And should there be changes in economic conditions, we will adjust. Our model, with its focus on prime lending and through-the-cycle underwriting, has historically supported resilient returns through the economic cycle. These factors, combined with our earnings power, reserves, and capital, underpin our strategy of being the leading consumer digital bank. I'll now turn the call over to John to review our results.