Low Credit Costs and the Return of Loan Growth Set the Stage for a Strong 2022 for Discover

After more than two years of little to no receivable growth and credit losses well below normal levels, we are seeing signs of normalization as consumers are once again borrowing on their cards. We anticipate credit costs will be higher in 2022 but given how low the firm's delinquency rates are we do not expect a full return to normal credit costs until 2023. We do not expect this to put any pressure on the bank's balance sheet as Discover is in a strong financial position. Additionally, Discover's net interest income will benefit from a larger credit card receivable base as growth has returned, with the bank ending July 2022 with $81 billion in credit card loans, 16.7% higher than a year ago.