American Express Profit Rises 12% as Credit-Card Spending Reaches a Record
AmEx Profit Increases
Andrew Harrer/Bloomberg
American Express Co. corporate credit cards.
American Express Co. corporate credit cards. Photographer: Andrew Harrer/Bloomberg
American Express Co. (AXP), the largest credit-card issuer by purchases, capped a record year for profit and beat analysts’ estimates as fourth-quarter net income climbed 12 percent and customer spending surged.
Net income was $1.19 billion, or $1.01 a share, up from $1.06 billion, or 88 cents, a year earlier, the New York-based lender said yesterday in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 99 cents. Net revenue for the quarter rose 6.9 percent to $7.74 billion.
“Cardmembers spent a record amount on their American Express cards, continuing a trend that has translated into overall share gains during the last two years,” Chief Executive Officer Kenneth I. Chenault, 60, said in the statement. “The overall recovery in the U.S. remains uneven and the environment in Europe continues to pose challenges for the global economy.”
Chenault is expanding AmEx’s reach beyond its affluent credit-card clients with a new payment system for smartphones and computers as it vies for customers who prefer debit cards. The electronic wallet, called Serve, may draw more transactions to AmEx’s global network. In June, the company introduced a prepaid card that also targets a broader consumer base.
Full-Year Profit
Profit for the year increased 22 percent to $4.9 billion and revenue advanced 8.6 percent to $30 billion, both records.
American Express climbed 0.8 percent to $50.95 at 4 p.m. in New York and has advanced 13 percent in the past year. The shares slid 2.3 percent at 5:32 p.m. in extended trading.
Fourth-quarter U.S. card income rose 3.9 percent to $727 million from a year earlier and international card income climbed 54 percent to $152 million, according to the statement.
Worldwide card spending, or billed business, rose 11 percent to $219 billion, the company said in a financial supplement. Individuals spent an average of $3,933, an increase of 8.4 percent from a year earlier, when AmEx had fewer cards outstanding.
“We continued to grow well above the average rate of our large issuing competitors, despite difficult prior-year comparisons and a challenging global economic environment,” Chief Financial Officer Dan Henry said in a conference call with analysts. “Certain regions internationally did show slowing growth, especially in Europe, where growth slowed to 4 percent.”
The company set aside $409 million in the fourth quarter to cover future loan losses, a 71 percent increase from a year earlier, AmEx said. Total expenses were $5.59 billion, up from $5.53 billion.
Write-offs for loans AmEx deems uncollectible fell to 2.3 percent in December, from 2.4 percent in the previous month, the company said in a Jan. 17 regulatory filing. Loans at least 30 days overdue, a signal of future defaults, fell to 1.4 percent from 1.5 percent, the lowest of the six-biggest U.S. credit-card issuers.
To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net
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