American Express Profit Up 17%
American Express Co. said Monday that profit rose 17% for the fourth quarter, the biggest jump in two years, as rising consumer confidence spurred record card use.
Net income rose to $896 million, or 71 cents a share, from $763 million, or 59 cents, a year earlier, the New York-based company said. Analysts surveyed by Thomson First Call expected earnings of 70 cents a share.
Chief Executive Kenneth Chenault has increased quarterly earnings by more than 10% for three years. American Express got a boost in the quarter as U.S. retail sales climbed 9.4%, based on Bloomberg same-store sales data.
The company added 4.9 million cardholders, an 8.1% gain that brought the total to 65.4 million. Card balances outstanding rose 7.2% to $46.5 billion. Revenue increased 10% to $7.77 billion, and expenses were $6.6 billion, an 11% jump.
Cost cutting during the quarter included the elimination of 2,000 jobs and the sale of units in Bangladesh, Egypt, Luxembourg and Pakistan. The restructuring resulted in costs of $102 million, the company said.
Revenue in the company’s travel and card unit rose 11% to $5.79 billion as the company boosted marketing, promotion and rewards 24% to $1.42 billion.
The card unit set aside $566 million for bad loans, 3% less than a year earlier. Profit was $729 million, a 20% increase from the fourth quarter of 2003.
A U.S. Supreme Court decision may help Chenault extend his streak this year. The court ruled on Oct. 4 that American Express could distribute credit cards through banks that were previously limited to offering Visa and MasterCard.
Since November, American Express and MBNA Corp. have been sending out hundreds of thousands of mailings promoting a co-branded card.
American Express added 1.9 million new U.S. cardholders in the fourth quarter, after signing up an average of about 500,000 a quarter during the first nine months of the year, Chief Financial Officer Gary Crittenden said.
American Express shares rose 67 cents to $52.60 on the New York Stock Exchange.
