Dear Shareholders,
A phrase I hear frequently at Discover is, “We succeed together.” It reflects not only our strong collaborative culture but also the nature of our work—driving business results requires teams from business technology to marketing, analytics to compliance, to work together as one. More broadly, though, “We succeed together” reflects our view that for our company and shareholders to succeed, we must also succeed in our mission of helping millions of customers achieve brighter financial futures and having a positive impact on the communities in which we live and work.
2022 started on an optimistic note, with the economy rebounding and hope that the COVID-19 pandemic would be entering an endemic phase. But surging inflation, rapidly rising interest rates and the global impact of Russia’s invasion of Ukraine brought a year of economic uncertainty. Against this backdrop, Discover’s robust business model, disciplined execution and team of more than 20,000 hard-working employees produced our second-highest earnings in company history, with a net income of $4.4 billion, or $15.50 per diluted share, and drove growth across our business.
Succeeding with Shareholders
In 2022, Discover grew card new accounts and total loan receivables year-over-year by 23 and 20%, respectively, while maintaining our disciplined approach to underwriting and credit management. Our net charge-off rate was 1.8%. Customer Deposits grew 14%, and Diners Club International volume grew 29%, benefiting from rising international travel.
We invested significantly in key areas of our business to advance our data and analytics capabilities, improve our products and features, strengthen compliance and expand our global acceptance footprint. These investments position Discover to continue driving shareholder value. Together, we achieved a 31% return on equity and a 39% efficiency ratio. We also repurchased $2.4 billion in common stock, increased our dividend by 20%, and will look to sustain attractive levels of capital return to our shareholders well into the future.
Succeeding with Customers
In 2022, Discover continued to offer groundbreaking products and features, including an enhanced Cashback Debit account featuring 1% cash back on debit transactions, and a new free Online Privacy Protection benefit, which has helped over 3 million customers remove more than 30 million personal records from select people-search websites.
We continued to prioritize contactless technology, enabling a Tap on Mobile feature allowing merchants to accept contactless payments on their smart devices.
Succeeding with Communities
In June, we celebrated the one-year anniversary of our Chatham Customer Care Center, which will bring 1,000 jobs to Chicago’s South Side by 2024, and in November, we announced our Ohio operations would move to Whitehall, a growing and diverse suburb in Columbus. We will continue to strengthen our communities by creating jobs, hiring minority- and women-owned suppliers, and partnering with nonprofits and other local organizations to drive change.
Discover also made a lasting impact through volunteerism and charitable contributions. In 2022, nearly 7,000 Discover employees volunteered almost 45,000 hours in support of 370 causes—our highest volunteer numbers since 2019. As a company, Discover donated more than $17 million to various charities and initiatives, including food banks, local schools and disaster relief efforts.
Looking Ahead
Discover enters 2023 with strong momentum. And while economic conditions remain uncertain, our direct banking model—leveraging our proprietary payments network, a 100% consumer-focused approach, an industry-leading customer experience and a focus on prime lending with disciplined underwriting—has historically supported strong returns through any economic climate.
As proud as I am of all we’ve accomplished, I am even more excited about what lies ahead. I want to thank the Discover Board, our many partners, and all our employees for their dedication and commitment to our mission and continued success.
Truly, we succeed together.
Roger C. Hochschild
Chief Executive Officer and President
March 21, 2023
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