Consumers boost Amex profit
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NEW YORK (Reuters) -- American Express Co. says its fourth-quarter profits rose nearly 12 percent as the financial services company put its charge cards in the hands of more consumers and the improved stock market conditions lifted its asset management business.
New York-based American Express on Monday reported fourth-quarter earnings of $763 million, or 59 cents per share. A year earlier, the company reported earnings of $683 million, or 52 cents per share.
Before a $20 million non-cash pre-tax charge taken to reflect new accounting rules, the company reported fourth-quarter net income of 60 cents per share.
Analysts, on average, expected American Express to earn 59 cents per share, according to Reuters Research, a unit of Reuters Group Plc.
"All in all it was a very good quarter," wrote CIBC World Markets Inc. analyst Michael Cohen in a note to clients, adding that American Express' card growth and loan growth "significantly" exceeded expectations.
Last week credit card issuers Capital One Financial Corp and MBNA Corp. posted higher quarterly results, boosted by improved credit quality and active consumers who used their cards to charge their holiday shopping sprees.
American Express, which has been pushing consumers to use its cards beyond travel and entertainment purchases, said revenue rose to $7.1 billion from $6.2 billion a year earlier.
Earlier this year, American Express Chairman and CEO Kenneth Chenault said he would sacrifice some of 2003's earnings per share growth to pump money into new business and get a jump start on early signs of an economic recovery.
Expenses rose 14 percent in the quarter compared with a year earlier as it plowed money into marketing and promotions.
But Chenault Monday said that strategy is paying off.
"Higher investment spending over the past year or so has substantially improved our competitive position and is generating strong growth in cardmember spending and loan volumes," he said in a statement.
"Credit quality continues to be outstanding. We are also benefiting from stronger equity markets as well as an improvement in the travel sector."
For the year, American Express reported earnings per share before the accounting change of $2.31. In October, the company said it expected 2003 per-share earnings, before the accounting change, to be at the high end of its previous target of $2.26 to $2.29 per share.
Separately, American Express said it elected Ursula Burns, president of Business Group Operations at Xerox Corp. to its board.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
