Discover beats forecasts, profit more than doubles

NEW YORK (Reuters) - Discover Financial Services said on Thursday that quarterly profit more than doubled, beating expectations, as customers spent more on their credit cards and the company started to reap the benefits of its expansion beyond credit card lending.

The Riverwoods, Illinois, credit card company on Thursday reported profit of $600 million, or $1.09 per share for the fiscal second quarter ended May 31.

That compared with a year-earlier profit of $258 million, or 33 cents per share.

Analysts on average had expected Discover to earn 75 cents per share, according to Thomson Reuters I/B/E/S.

Discover, like American Express Co , both lends directly to consumers and also competes with larger card networks Visa Inc and MasterCard Inc to process card transactions for banks.

Lenders have struggled with weak consumer loan demand after the financial crisis, and Discover is increasingly trying to build up other businesses, including its transition-processing and traditional banking offerings. It bought a student lending platform from Citigroup Inc last year, and last month agreed to buy an online mortgage origination business from Tree.com Inc .

Discover's overall balance of loans increased 5 percent from a year earlier, despite a 1 percent decline in credit card loans. Revenues grew 5 percent from a year earlier, to $1.74 billion, above expectations.

The company's shares closed down almost 1.9 percent on Wednesday, at $23.59 and rose about 1.5 percent in premarket trading on Thursday.

The company's shares have gained more than 27 percent this year. Last week it announced a $1 billion share buyback program.

(Reporting by Maria Aspan, editing by Gerald E. McCormick, Dave Zimmerman)

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