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Discover Financial Services reports mid-cycle stress test results

DiscoverFinancial Services has released its mid-cycle company-run stresstest results conducted in accordance with the Dodd-Frank Act.

Under the severely adverse scenario presented beginning in thesecond quarter of 2016 and running through the third quarter of 2018, thecommon equity Tier 1 capital ratio is projected to be 12.1% at the thirdquarter of 2018, with the ratio hitting a minimum level of 11.4% during theperiod. The actual common equity Tier 1 capital ratio for the second quarter of2016 was 14.3%.

Discover projected a Tier 1 capital ratio at the thirdquarter of 2018 of 12.9% and a Tier 1 capital ratio minimum level during theperiod of 12.1%. The actual ratio for the second quarter of 2016 was 15.0%.

The total risk-based capital ratio projected at the thirdquarter of 2018 was 14.3%, with a minimum ratio of 13.7% during the period. Theactual total risk-based capital ratio for the second quarter of 2016 was 16.7%.

Discover noted that while these ratios decline during thenine-quarter period imagined in the scenario, the ending and minimum ratios are"significantly" above regulatory requirements.

The ratios are slightly higher than Discover projected inits June stress test results, which were for the horizon between the firstquarter of 2016 and the first quarter of 2018.