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©2008 Discover Financial Services

ASF 2008 Conference

February 2008

Exhibit 99.1

©2008 Discover Financial Services

2

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Notice

The following slides are part of a presentation by Discover Financial Services (the "Company") and are

intended to be viewed as part of that presentation. No representation is made that the information in these

slides is complete.  The presentation has been prepared solely for informational purposes, is neither an

offer to sell nor the solicitation of an offer to buy any security or instrument.

The

information

provided

herein

may

include

certain

non-GAAP

financial

measures.

The

reconciliations

of

such

measures

to

the

comparable

GAAP

figures

are

included

in

the

Company’s

Registration

Statement

on

Form

10,

as

amended,

the

Company’s

Form

10-Q

for

the

3

rd

Quarter

2007

and

the

Company’s

4

th

Quarter

Earnings

Release

furnished

on

Form

8-K

dated

December

20,

2007,

each

of

which

is

on

file

with

the

SEC.

The presentation contains forward-looking statements. You are cautioned not to place undue reliance on

forward-looking statements, which speak only as of the date on which they are made, which reflect

management’s estimates, projections, expectations or beliefs at that time and which are subject to risks

and uncertainties that may cause actual results to differ materially. For a discussion of certain risks and

uncertainties

that

may

affect

the

future

results

of

the

Company,

please

see

"Special

Note

Regarding

Forward-Looking

Statements,"

"Risk

Factors,"

"Business

-

Competition,"

"Business

–

Regulatory

Matters" 

and

"Management’s

Discussion

and

Analysis

of

Financial

Condition

and

Results

of

Operations"

in

the

Company’s

Information

Statement

that

is

included

as

part

of

its

Registration

Statement

on

Form

10,

as

amended,

and

the

Company’s

Form

10-Q

for

the

3

rd

Quarter

2007,

each

of

which

is

on

file

with

the

SEC.

The historical financial information prior to the Company’s spin-off from Morgan Stanley included in the

presentation has been derived from Morgan Stanley’s consolidated financial statements and does not

necessarily reflect what our financial condition, results of operations or cash flows would have been had

we operated as a separate, stand-alone company during such periods presented.

©2008 Discover Financial Services

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Today’s Agenda

•

Business Overview

•

U.S. Card

•

Credit Risk Management

•

Summary of DCENT Securitization Structure

•

DCMT / DCENT Issuance History and Maturity

Schedule

©2008 Discover Financial Services

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Business Overview

*

*

©2008 Discover Financial Services

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DFS Highlights

•

Unique franchise –

a leading independent card issuer and payments

network

•

U.S. card is a high margin, strong cash flow generator that is well

positioned for growth

•

Expanding payments business through merchant acquiring strategy and

PULSE relationships

•

Challenging operating environment in UK

–

$391MM pre-tax non-cash impairment charge in 4Q07

•

Extending direct financial services that leverage brand, capabilities and

large customer base

•

Spin-off completed June 30, 2007

–

Seasoned management team in place

–

Solid financial track record and capital position

©2008 Discover Financial Services

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Seasoned Management Team

Discover Financial Services

JAMES PANZARINO

SVP, Chief Credit Risk Officer  

2003 / American Express

ROGER HOCHSCHILD

President & COO

1998 / MBNA

DAVID NELMS

Chairman & CEO

1998 / MBNA

KELLY MCNAMARA-

CORLEY

SVP, General Counsel &

Secretary

1999 / Morgan Stanley

CHARLOTTE HOGG

SVP, International 

2004 / Morgan Stanley

ROY GUTHRIE

EVP, Chief Financial Officer

2005 / Citigroup

CARLOS MINETTI

EVP, Cardmember Services &

Consumer Banking

2001 / American Express

MARGO GEORGIADIS

EVP, Chief Marketing Officer 

2004 / McKinsey

DIANE OFFEREINS

EVP, Chief Technology Officer

1998 / MBNA

STEPHEN

ETHERINGTON

SVP & Treasurer

2007 / JPMorgan

Date Joined / Previous Employer

HARIT TALWAR

EVP, Discover Network  

2000 / Citigroup

KEVIN SWEENEY

Director Treasury

2006 / MBNA

©2008 Discover Financial Services

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Payments Network

Card

Issuing

Credit

Debit

Discover

American

Express

Visa

MasterCard

First Data

Metavante

Citi

Bank of

America

JPM Chase

Capital One

Payments Networks

Unique Business Model

•

One of two card issuers that operate a U.S.

payments network –

only one with both

credit and debit capabilities

•

Discover Network has supported the card

issuing business through:

–

Building Discover brand

–

Joint promotions with merchants

–

Operational efficiencies

•

Advantages in payments:

–

Broad offering for issuers (credit, PIN

and signature debit)

–

Leveraging largely fixed cost network

©2008 Discover Financial Services

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•

U.K. cards issued by

Goldfish Bank

–

$4.4Bn receivables

–

Operating on MasterCard

and Visa networks

•

PULSE and Discover

Network third-party

payments business

–

4,500+ financial

institutions

–

$91.7Bn network volume

•

Discover cards issued on

Discover Network

–

6

th

largest issuer

–

$48.2Bn receivables

–

3

rd

largest U.S. merchant

network

International Card

Third Party

Payments

U.S. Card

Business Segments and Objectives

•

Grow third-party credit

and debit volume 18%+

•

Eliminate U.K. loss

•

2.9% pretax ROMR

•

Maintain credit quality

•

Grow loans 4% –

8%

Objectives

•

Complete rollout of acceptance strategy

Note(s):

All

data

as

of

November

30,

2007;

full

year

resultswhere

applicable

and

receivables

data

on

a

managed

basis

©2008 Discover Financial Services

9

This material is not a solicitation or offer to buy or sell any security or other financial instrument or to participate in any trading strategy 

~100%

        Large        

Merchants

      Small      

Merchants

Merchant Acceptance

% of Visa/MasterCard Merchants

New Acceptance Strategy

Note(s):

(1)

“A

National

Retail

Census

of

Product

Distribution:

Credit

Cards”

GfK

NOP,

Spring

2006;

based

on

random

sampling

of

approximately 1% of U.S. retail and service establishments

(1)

~77%

3

rd

party

acquirer

opportunity

Sample Third-Party

Acquirers Signed

Third-Party Acquirer Timeline

2005

2009

Internal

Systems/Operations

Sign 3

rd

Party

Acquirers

2006

2007

2008

Implementation

©2008 Discover Financial Services

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Optimal Acceptance Model

Leverage acquirer scale

and coverage

Economics similar to Visa

and MasterCard

Network

Interchange

Acquirer assessments

~30% of volume

~85% of outlets

Indirect through acquirers

Outsourced Merchants

Retained Merchants

Joint marketing opportunities

Direct relationships and scale

provide efficiencies

Advantages

Network and acquiring

Expenses

Merchant discount

Merchant fees

Revenue

~70% of volume

~15% of outlets

Mix (target)

Direct

Relationship

New Model Payoff:

Higher Discover Card spend and balances

Greater appeal for third party issuers

©2008 Discover Financial Services

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International Acceptance Partnerships

•

Long-term reciprocal

acceptance agreement signed

in May 2005

•

#1 network in China

•

70% better acceptance than

Visa/MasterCard in China

•

Long-term reciprocal

acceptance agreement signed

in August 2006

•

Leading global payment brand

based in Japan

•

Similar acceptance to

Visa/MasterCard in Japan

©2008 Discover Financial Services

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U.S. Card

*

*

*

©2008 Discover Financial Services

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80%

63%

57%

72%

64%

43%

21%

8%

11%

11%

<1%

8%

36%

28%

17%

32%

37%

12%

Discover

AMEX

BofA

Citi

JPM

Chase

Cap One

Notes:

(1)

2007 TNS Consumer Card Strategies Research Program

(2)

Portfolio

Tenure

based

on

trust

data:

Discover

(12/31/07);

AMEX

(

8/31/07);

BofA

(1/4/08);

Citi

(9/30/07);

JPM

Chase

(9/30/07);

Cap One (9/28/07)

(3)

AMEX has <1% of Portfolio Tenure < 2 Years

(4)

Domestic rate as of 11/2007

(5)

Cardweb

(excludes Discover & American Express) as of 11/2007

<2 Years

2 -

5 Years

> 5 Years

63%

48%

88%

49%

36%

76%

Income >50K

College

Graduates

Home Ownership

Demographic Profile

(1)

Discover

Other Issuers

Attractive and Stable Cardmember Base

•

Attractive cardmember demographics

versus average issuer

–

Higher income

–

More educated

–

Greater home ownership

•

High cardmember loyalty

–

Tenure longer than industry average

–

Attrition rate

(4)

favorable to industry

average

(5)

•

Cardmember base provides platform for

strong credit performance and cross-sell

Portfolio Tenure

(2)(3)

©2008 Discover Financial Services

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Lower Exposure in Difficult Housing Markets

•

Prime credit origination

•

Targeted geographic &

marketing criteria

•

Enhanced collections & credit

management / in-house capabilities

•

Focused on retention and growth

from base

Risk Mitigation Strategies

9%

12%

12%

15%

13%

17%

6%

6%

6%

8%

9%

15%

18%

18%

21%

22%

25%

6%

Discover

Capital

One

Chase

Citibank

Bank of

America

American

Express

California

Florida

Source:

Latest

Master

Trust

data

as

of

1/28/08

Note(s):

(1)

As

represented

by

Chase’s

CHAIT

Master

Trust

(1)

Distribution of Receivables

©2008 Discover Financial Services

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Differentiators For Profitable Growth

607

617

651

652

728

735

AMEX      Discover

Citi

Chase

Capital

One

BofA

Cash Reward Mail Share

Unaided Issuer Brand Awareness

Card Satisfaction

•

Brand and service advantage

vs. Visa/MasterCard issuers

•

Leading position in cash

rewards marketing

Source:

2007 J.D. Power Card Satisfaction Index

Source:

GfK

Arbor,

January

2007

Source:

Comperemedia

15%

16%

22%

18%

16%

18%

18%

16%

15%

17%

20%

25%

27%

26%

24%

47%

41%

35%

41%

43%

4Q06

1Q07

2Q07

3Q07

4Q07

Discover

Chase

HSBC

Other

15%

23%

25%

28%

62%

63%

AMEX

Discover

Capital

One

Citi

Chase

BofA

©2008 Discover Financial Services

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Direct Mail

Online

Telemarketing

Other

Diversified Acquisition Channels

Direct Mail

Online

Telemarketing

Other

•

While direct mail remains largest

acquisition channel, other channels

generate half of new accounts

•

Leveraging expertise across

multiple channels focusing on

activation and performance not just

cost per account

•

Focus on continued growth in

cost-effective acquisition of new

accounts helps drive sales and

receivables

•

Other channels (e.g., Insertions,

Coupon-on-page, etc.) have grown

considerably

Note:

(1)

Excludes Student and Discover Business Card

2007

New

Accounts

by

Channel

(1)

50%

24%

21%

5%

2006

New

Accounts

by

Channel

(1)

20%

11%

15%

54%

©2008 Discover Financial Services

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Credit Risk Management

*

*

©2008 Discover Financial Services

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Credit Risk Management Framework

•

Risk Tolerance

–

Target market is prime credit segment in the U.S.

–

Current net loss experience is consistent with our business model

and target market

–

Risk adjusted return framework used for marginal decisions

•

Risk Governance

–

Credit policy and process changes reviewed and approved

–

Policy recommendations consider full impact on revenue, expenses

and loan losses

•

Risk Principles

–

Independent credit risk management function

–

Management of risk exposures through approved risk limits

–

Business unit ownership of risk / reward decisions

©2008 Discover Financial Services

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Credit Risk Approach

Prospecting

Account

Acquisition

Portfolio

Management

Collections/

Recoveries

Balanced Approach Through Life Cycle

•

Source potential cardmembers from credit bureaus and purchased lists

•

Utilize proprietary credit models

•

Utilize response and usage models

•

Evaluate existing relationships

©2008 Discover Financial Services

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Credit Risk Approach (cont’d)

Prospecting

Account

Acquisition

Portfolio

Management

Collections/

Recoveries

Balanced Approach Through Life Cycle

•

Systematic decisions supplemented by selective manual underwriting

•

Apply credit criteria including assessment of stability, ability

and

willingness to pay

•

Utilize credit models incorporating application and bureau data

•

Assign credit line

•

Quantify estimated relationship value

©2008 Discover Financial Services

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Credit Risk Approach (cont’d)

Prospecting

Account

Acquisition

Portfolio

Management

Collections/

Recoveries

Balanced Approach Through Life Cycle

•

Proactive account management using comprehensive range of internal

and external performance information

•

Transaction level decisioning

•

Decisioning supported by behavior scorecards

©2008 Discover Financial Services

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Credit Risk Approach (cont’d)

Prospecting

Account

Acquisition

Portfolio

Management

Collections/

Recoveries

Balanced Approach Through Life Cycle

•

Focus on early identification, support and rehabilitation

•

Utilize risk profile to segment delinquent population and target

offers/programs

•

Utilize behavior scorecards

•

Optimize collections and recovery activities

•

Manage collections and recoveries to grow business in the long term

while maintaining near-term discipline

©2008 Discover Financial Services

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Delinquency Trends

U.S. Credit Card

$2,812

$2,124

$1,761

$1,720

$1,550

2003

2004

2005

2006

2007

Managed 30+ Day Delinquencies

(1)

($MM)

6.09%

3.98%

3.39%

3.59%

4.65%

Note:

(1)

Delinquency Rate = $ delinquent/managed receivable at period end

©2008 Discover Financial Services

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Loan Losses

U.S. Credit Card

$3,281

$2,753

$2,369

$1,752

$1,797

2003

2004

2005

2006

2007

Managed Net Principal Loan Losses ($MM)

6.75%

6.12%

5.30%

3.96%

3.84%

©2008 Discover Financial Services

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0%

1%

2%

3%

4%

5%

6%

7%

2004

2005

2006

1Q07

2Q07

3Q07

4Q07

Discover

Chase

Capital One

AMEX

BofA

Strong Relative Credit Performance

Note(s): 

(1)

Discover fiscal year, all others calendar year

(2)

U.S. Card

(3)

Card Services

(4)

U.S. Consumer and Business Card

Source:

SEC

Filings

0%

1%

2%

3%

4%

5%

6%

7%

2004

2005

2006

1Q07

2Q07

3Q07

4Q07

Discover

Citigroup

Chase

Capital One

AMEX

BofA

(2)

(2)

(2)

(2)

(2)

(4)

Managed 30+ Day Delinquency Rate

(1)

(2)

(3)

(2)

(4)

(2)

Managed Charge-off Rate

(1)

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Summary of DCENT

Securitization Structure

*

*

©2008 Discover Financial Services

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Summary Structure and Payment Waterfalls

Source:

SEC Filings

Discover Bank

DCMT

Discover Card Master Trust

DCENT

Discover Card Execution Note Trust

Class A

Investors

Class B

Investors

Class C

Investors

Receivables

Series 2007-CC

Collateral Certificate

Class A

Notes

Class B

Notes

Class C

Notes

Other Series

of Certificates

Existing

DCMT

Investors

DiscoverSeries Finance Charge Amounts

Class A Interest

Class B Interest

Class C Interest

Servicing Fees

Reimburse Current  Charged-off Receivables

Reimburse Class A Deficits -1

Reimburse Class B Deficits-

1

Reimburse Class C Deficits -1

Deposits into the Accumulation Reserve

Deposits into Class C Reserve

Deposits into DCMT Reallocation Accounts

Pay Discover Bank

Class A Interest Shortfalls -

2

Class B Interest Shortfalls -

2

Servicing Fees Shortfalls -

2

Class A Principal

Prefund Class A Notes

Class B Principal

Prefund Class B Notes

Class C Principal

Deposits into DCMT Reallocation Account

Reinvestment in New Receivables

DiscoverSeries Principal Amounts

1 –

due to charge-offs from prior periods

2 –

payable out of subordinate principal cashflows

©2008 Discover Financial Services

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Spread Account

Source:

Recent Transaction Prospectuses

Note:

(1)

For CCCIT and CHAIT, 6.75% when excess spread drops below 0.00%

•

The spread account ramps up based on 3-month excess spread and provides additional credit enhancement in the event of

prolonged economic cycle changes

•

Credit enhancement provided by the spread account is consistent with other deals in the market

7.75

6.00

(1)

6.00

(1)

6.00

6.00

Less than 2.00 or Early

Redemption Event

6.00

5.00

5.00

4.50

4.50

2.00 to 2.49

5.00

4.00

4.00

3.50

3.50

2.50 to 2.99

3.50

2.75

2.75

2.75

2.75

3.00 to 3.49

2.75

1.75

1.75

2.00

2.00

3.50 to 3.99

1.75

1.25

1.25

1.25

1.25

4.00 to 4.49

0.00

0.00

0.00

0.00

0.00

4.50+

COMET

CHAIT

CCCIT

BACCT

DCENT

Excess Spread Percentage

Three-Month Average

Spread Account Funding Schedule (%)

Variable Spread Account

•

The reserve account provides credit enhancement solely for the Class C notes to cover shortfalls of interest and to reimburse losses

related to charged-off receivables or the application of series principal amounts allocated to these notes to pay interest on senior

notes or servicing fees

•

If the funded amount of the spread account exceeds the targeted amount, the difference will be released and treated as series

finance charge amounts

•

The three-month average excess spread for the DiscoverSeries notes will determine the funding percentage, which is multiplied by

the

total

balance

of

all

outstanding

dollar

principal

amounts

minus

certain

amounts

on

deposit

in

the

principal

funding

subaccounts

for

maturing tranches of DiscoverSeries notes

©2008 Discover Financial Services

29

This

material

is

not

a

solicitation

or

offer

to

buy

or

sell

any

security

or

other

financial

instrument

or

to

participate

in

any

trading

strategy

Fixed Method of Allocation of Finance Charges

Traditional Structures

•

In most credit card master trusts, finance charge collections are allocated pro rata on each payment date

between the investor interest in receivables and the seller interest. As the investor certificates begin to

amortize, certificateholders are entitled to a smaller percentage of finance charge collections

Methodology

•

Before early redemption, the investor interest in receivables and seller interest receive their pro rata share of

finance charge collections

•

During early redemption, as the invested amount decreases, investors continue to be allocated finance charge

collections as at the beginning of the early redemption cycle

–

Investor credit protection enhanced by “fixing”

the finance charge allocation percentage between investors

and the seller at the time of an early redemption event

•

The result is an over-allocation of finance charge collections

Benefits

•

Feature permits a larger percentage of finance charge collections to be allocated to investors after an early

redemption event

During Amortization Periods

•

Allocation Percentage generally equals

–

Investor Interest in receivables at time of Early Redemption Event / Current Principal Receivables

–

Aggregate investor allocation can not exceed 100%

•

Numerator is “fixed”

to amount of investor interest in receivables at time of early redemption; denominator reflects current level

of principal receivables

•

DiscoverSeries

structure retains ability to change allocation method, but Rating Agency Confirmation is required

©2008 Discover Financial Services

30

This

material

is

not

a

solicitation

or

offer

to

buy

or

sell

any

security

or

other

financial

instrument

or

to

participate

in

any

trading

strategy

DCMT / DCENT Performance Data

21.92%

2.58%

1.18%

8.45%

5.13%

4.30%

20.27%

16.95%

Oct-06

20.54%

2.55%

1.13%

7.63%

4.01%

4.70%

19.80%

16.18%

Nov-06

21.97%

2.48%

1.06%

8.20%

4.03%

4.24%

20.29%

16.12%

Dec-06

22.52%

2.49%

1.05%

7.28%

4.27%

3.89%

18.65%

15.64%

Jan-07

19.73%

2.51%

1.06%

8.14%

5.41%

4.18%

19.29%

16.56%

Feb-07

21.17%

2.42%

1.03%

8.17%

4.85%

4.35%

20.28%

16.96%

Mar-07

20.28%

2.34%

0.98%

6.94%

3.71%

4.27%

18.58%

15.35%

Apr-07

21.24%

2.22%

0.94%

7.93%

4.30%

4.46%

20.16%

16.53%

May-07

20.53%

2.21%

1.02%

7.27%

3.82%

4.21%

19.11%

15.66%

Jun-07

21.81%

2.28%

1.02%

10.43%

8.73%

5.23%

3.90%

20.06%

16.57%

Jul-07

21.61%

2.34%

1.06%

8.74%

7.91%

4.26%

3.91%

19.99%

16.34%

Aug-07

20.61%

2.47%

1.12%

7.96%

8.40%

5.22%

4.04%

20.04%

16.86%

Sep-07

21.05%

2.56%

1.16%

7.64%

8.88%

5.58%

3.98%

20.55%

17.20%

Oct-07

19.74%

2.65%

1.17%

7.85%

8.30%

4.69%

4.46%

20.08%

16.45%

Nov-07

20.88%

2.69%

1.14%

8.50%

8.78%

4.92%

4.62%

20.54%

16.67%

Dec-07

Payment

Rate

60-179 Days

30-59 Days

Discover

Series

Interchange

Subgroup

Group

Net

Charge-off

Yield incl.

interchange

Yield excl.

Principal

Recoveries

Delinquencies

Excess Spread

Yield

©2008 Discover Financial Services

This

material

is

not

a

solicitation

or

offer

to

buy

or

sell

any

security

or

other

financial

instrument

or

to

participate

in

any

trading

strategy

DCMT / DCENT Issuance

History and Maturity Schedule

*

*

©2008 Discover Financial Services

32

This

material

is

not

a

solicitation

or

offer

to

buy

or

sell

any

security

or

other

financial

instrument

or

to

participate

in

any

trading

strategy

3,579

4,842

3,263

7,242

7,684

8,268

5,080

4,976

3,776

4,945

8,768

6,408

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012+

Discover Card Master Trust Issuance/

Maturity Schedule

U.S. (Domestic)

DCMT I Issuance / Maturities –

As of December 31, 2007

($MM)

$27.0Bn asset-backed securitization portfolio

(Fiscal Year Basis)

ABS Issuance

ABS Maturities