Magazine article American Banker

AMEX off 17%; Spinoff Cited

Magazine article American Banker

AMEX off 17%; Spinoff Cited

Article excerpt

American Express Co. said Monday that fourth-quarter earnings fell 17% from a year earlier, to $745 million, due largely to the spinoff of its advisory unit in September.

Earnings per share fell 17%, to 59 cents, matching the average analyst estimate. Revenues jumped 9.1%, to $6.43 billion, $41 million short of the average estimate.

Earnings from continuing operations rose 12%, to $751 million, however, and merchant discount revenue rose 13%, to $3.2 billion, as average cardholder spending rose 7%, to $2.8 billion. Cards-in-force rose 9%, to 56 million.

Chairman and chief executive Kenneth I. Chenault said in a press release that "higher spending by affluent consumers, small businesses, and corporate Cardmembers more than offset the impact of an industrywide spike in bankruptcy filings."

Net chargeoffs rose 50 basis points from a year earlier, to 4.6%. Loans 30 days past due were 2.4% of the portfolio, unchanged from a year earlier. The provision for losses for the U.S. card business rose 32%, to $509 million, because of the spike in bankruptcy filings, American Express said.

Analysts had lowered their earnings expectations after Mr. Chenault advised them to cut their estimates in November because many had not accounted for the spinoff of the advisory unit, Ameriprise Financial Inc., or higher marketing spending.

Marketing expenses rose 11%, to $1.6 billion, and Amex increased its investment in technology platforms during the quarter, Mr. Chenault said.

The average discount rate Amex charges merchants continued to fall; it dropped 4 basis points, to 2. …

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