Discover Financial Services promoted operating chief Roger Hochschild to succeed Chief Executive Officer David Nelms, who’s stepping down Oct. 1 after two decades at the credit-card lender.
Nelms, 57, plans to retire early next year and will continue as executive chairman until then, the Riverwoods, Illinois-based company said Friday in a statement.
“There is really no more qualified executive for this specific role,” KBW analyst Sanjay Sakhrani said in a note to clients. “Hochschild’s breadth of experience — 20 years at Discover — will position him well for the CEO role and provide for a smooth transition.”
Hochschild, 53, takes over as competitors including Wells Fargo & Co. and Goldman Sachs Group Inc. look to the U.S. credit-card market for growth. Earlier this year, Discover was among the first major lenders to resume offering debit card rewards in an effort to bolster deposits.
Discover is the seventh-biggest credit-card issuer in the U.S., with about $67.8 billion in outstanding loans, according to data compiled by Bloomberg. It also operates the fourth-biggest payments network, after Visa Inc., Mastercard Inc. and American Express Co.
Hochschild has been president and chief operating officer since 2004 and helped Nelms lead the company through its 2007 spin-off from Morgan Stanley. A year later, the two engineered Discover’s purchase of Citigroup Inc.’s Diner’s Club International.
“Roger is the right choice to lead the company into its next period of growth,” Lawrence Weinbach, Discover’s lead independent director, said in the statement. “His deep industry experience as well as his strong business and customer insights will help Discover continue to achieve industry-leading results.”
Nelms joined the firm in 1998 and has been CEO since 2004, leading it through the financial crisis when the company was forced to write off $3.8 billion of loans in a single year. Since then, Discover has added some businesses, such as student loans, and ditched others like mortgage lending.
Shares of Discover climbed 0.6 percent to $72.29 at 10:16 a.m. in New York.They’ve returned almost 200 percent since their 2007 debut, including reinvested dividends, outpacing the 16 percent total return for the 68-company S&P 500 Financials Index.