The head of Discover Financial Services, the fourth-largest U.S. credit card network, said he expects a rise in credit defaults in the second quarter, while loan growth is expected to slow in the second half of this year.

Discover Chief Executive David Nelms, speaking at a Sanford C. Bernstein conference, said he expects the charge-off rate – the percentage of debt the company does not expect to be repaid – on a managed basis, to be about 8 percent in the second quarter.

In the first quarter, Discover’s charge-off rate was 6.48 percent.

The company will also continue to set aside more money to cover bad loans, Nelms said.

With default rates at record levels, credit card companies are among the latest victims of an economic crisis that began with the collapse of the U.S. housing and subprime mortgage markets and has spread around the world.

Shares of the company were down 7 cents or less than 1 percent at $8.82 in morning trade on the New York Stock Exchange. (Reuters)