NEW YORK CITY (dpa-AFX) - Credit card service provider American Express Co. (AXP), Wednesday reported a fourth-quarter profit that more-than-doubled, driven mostly by higher card spending during the holiday shopping season and due to absence of hefty restructuring charges recorded last year. Both earnings and revenues for the quarter came in line with Wall Street expectations.
New York-based American Express's fourth-quarter profit surged to $1.31 billion or $1.21 per share from $630 million or $0.56 per share last year.
American Express recorded an after-tax charge of $41 million during the quarter related to a merchant litigation settlement. Last year's results were weighed down by after-tax charges totaling $594 million, including a $287 million restructuring charge consisting largely of severance payments related to job cuts.
Excluding the item, adjusted profit for the quarter was $1.35 billion or $1.25 per share. On average, 21 analysts polled by Thomson Reuters expected earnings of $1.25 per share for the quarter. Analysts' estimates typically exclude special items.
American Express, which is the biggest credit-card issuer on the basis of purchases, said its revenues, net of interest expense, for the fourth quarter rose to $8.55 billion from $8.14 billion last year. Twenty-two analysts had a consensus revenue estimate of $8.55 billion for the quarter. The increase reflects strong card member spending as well as higher net interest income.
American Express' card member spending during the quarter rose 8 percent. American Express' cardholders are mostly affluent consumers and businesses, which helps the company to perform better than its peers even during bad economic conditions.
Commenting on the results, Chief Executive Kenneth Chenault said,'Fourth quarter results reflected a healthy increase in billed business in the U.S. and internationally. We ended the year on a strong note, with Card Member spending up 8 percent despite mixed reports during the holiday shopping season.'
Provisions for loan losses, the money set aside to cover bad loans, decreased 17 percent to $528 million from $638 million last year.
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.
AXP closed Thursday's trading at $87.78, down $0.47 or 0.53%, on the NYSE. The stock further dropped $0.03 or 0.03%, in after hours trade.
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