The company faces risks from changes in economic variables (consumer credit, unemployment, etc.), pending and future legislation/regulation, the proposed merger with Capital One (including regulatory approvals, integration challenges, and potential shareholder litigation), competitor actions, credit risk, market risk, liquidity risk, operational risk, compliance and legal risk, and data security/privacy regulations. The sale of the private student loan portfolio also carries risks of not completing the transaction or unexpected delays. Potential regulatory penalties related to card product misclassification are a significant risk.
Financial Upside
The company expects increased net interest margin from higher card yields and the private student loan portfolio sale. Increased transaction volume in the Payment Services segment is anticipated. Higher loan receivables and yields are expected to drive interest income growth. A favorable legal settlement is expected to positively impact the Payment Services segment's pretax income.
