American Express Co. (AXP) said Thursday after the markets closed that its fourth quarter profit rose 12% from last year, driven by continued strong growth in cardmember spending. The company's quarterly earnings per share also came in above analysts' expectations, but is quarterly revenue fell short of analysts' forecast.
The New York-based company reported net income for the fourth quarter of $1.2 billion or $1.01 per share, compared to $1.1 billion or $0.88 per share for the year-ago quarter.
On average, 21 analysts polled by Thomson Reuters expected earnings of $0.99 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total revenues, net of interest expense, for the fourth quarter rose 7% to $7.74 billion from $7.24 billion in the same quarter last year, helped by increased cardmember spending and higher travel commissions and fees. Eighteen analysts had a consensus revenue estimate of $7.92 billion for the fourth quarter.
Net interest income for the quarter declined slightly to $1.18 billion from $1.19 billion a year earlier. Total provisions for losses grew 71% to $409 million in the fourth quarter from $239 million in the prior year quarter, reflecting a larger reserve release in the prior year quarter and higher loans outstanding in the current period. The company noted that credit indicators continued to be at historically low levels. "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. Billed business rose 11 percent, showing broad-based improvements from the strong levels of a year ago. Online spending was strong as we capitalized on the accelerating popularity of digital commerce." said Kenneth Chenault, chairman and chief executive officer, American Express. "The overall recovery in the U.S. remains uneven and the environment in Europe continues to pose challenges for the global economy," Chenault added.
The company's cardholders include mostly affluent consumers and businesses. For the fourth quarter, net income from the company's U.S. card services grew 4% year-over-year to $727 million, while net income from its international card services surged 54% to $152 million.
American Express shares, which have traded in a range of $41.30 to $53.80 over the past year, closed Thursday's regular trading session at $50.95, up 39 cents, but lost $1.06 or 2.08% in after hours trading.
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