NEW YORK CITY (dpa-AFX) - American Express Co. (AXP) Thursday reported a fourth-quarter profit that nearly halved from last year, hurt mainly by hefty one-time charges including the restructuring expense related to the planned 5,400 job cuts.
American Express' both quarterly earnings and revenues came in line with Street estimates.
The latest quarter's bottom line was weighed down by after-tax charges totaling $594 million, including a $287 million restructuring charge consisting largely of severance payments related to job cuts.
Last week, American Express, the biggest credit-card issuer on the basis of purchases, announced its plans to eliminate about 5,400 jobs in 2013, with largest cuts in travel services, a fast-changing business where consumers have switched more to digital technology for bookings.
The after-tax charges includes a $212 million costs related to changes in the process how the company calculates future redemptions. American Express also said it took a $95 million after-tax charge that deals 'with fees, interest and bonus rewards as well as an incremental expense related to the consent orders entered into with regulators last October.'
American Express, famed for its credit card and traveler's checks, earns a large part of its revenue from merchants, charging them a discount rate for transactions processed. Revenue also come from cardholders, who pay fees and interest charges on balances.
American Express' cardmember spending during the quarter rose 8 percent, despite a brief dip in late October and early November due to the impact of Hurricane Sandy on consumers and businesses in the northeast US.
American Express' cardholders are mostly affluent consumers and businesses, which has helped the company perform better after the recession with its customers spending more than its peer's customers. However, the slowdown in spending among its affluent customers is a cause for concern as US job growth continues to weaken amidst weak European and Asian economies.
American Express had announced its preliminary fourth-quarter results last week while it announced the job cuts.
The company confirmed that its fourth-quarter profit dropped to $630 million or $0.56 per share from $1.18 billion or $1.01 per share a year ago.
Excluding one-time items, earnings for the quarter were $1.23 billion or $1.09 per share. Analysts polled by Thomson Reuters expected earnings of $1.09 per share. Analysts' estimates typically exclude special items.
The New York-based company's revenues, net of interest expense, grew five percent to $8.14 billion from $7.74 billion a year ago. Analysts estimated revenues of $8.14 billion.
Provisions for loan losses, the money set aside to cover bad loans, increased 56 percent to $638 million from $409 million.
AXP closed Thursday at $60.74, up 0.20%, on the NYSE. The stock slipped 0.86% in after hours trade.
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