Magazine article American Banker

Bank Partnerships Help AMEX Gain in Holiday Share

Magazine article American Banker

Bank Partnerships Help AMEX Gain in Holiday Share

Article excerpt

American Express Co. said partnerships with bank issuers, both in the United States and elsewhere, boosted its fourth-quarter earnings and its share of holiday spending.

The New York company's earnings rose 17%, to $896 million. Earnings per share rose 20%, to 71 cents, which beat the average analyst estimate by a penny.

Revenue rose 10%, to $7.8 billion. That growth was helped by a strong increase in cardholder spending, an area where it gained ground against Visa U.S.A. Inc. and MasterCard International.

Amex card spending during the 2004 holiday shopping season "was the best it has ever been," Kenneth I. Chenault, its chairman and chief executive officer, said in a press release.

"Travel and entertainment spending also continued to rebound, and spending on cards issued by new and existing bank partners continued to grow at high rates," Mr. Chenault said. Preliminary figures for industrywide holiday card spending suggest that "we outpaced our network competitors and gained share at one of the fastest rates during the past five years."

Earnings from the Travel Related Services unit, which includes Amex's card business, rose 20.2%, to $729 million.

Record cardholder spending, including charges on new cards issued by MBNA Corp., resulted in a 16% increase in merchant discount revenue, to $2.8 billion.

Amex provides network services to dozens of bank partners outside the United States. Spending on cards issued by those partners increased more than 40%.

Within the United States, only MBNA, of Wilmington, Del., currently issues cards with Amex, though Citigroup Inc. has announced plans to start doing so. A Supreme Court decision in October not to hear an appeal effectively struck down Visa and MasterCard rules that forbade U.S. bank card issuers from offering Amex cards.

Fourth-quarter spending by Amex's U. …

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