American Express earnings rise 24 pct
NEW YORK – American Express Co. said that fourth-quarter profit rose almost 24 percent as customers of the No. 4 U.S. credit card issuer spent more money during the period.
Net income increased to $922 million, or 75 cents a share, from $745 million, or 59 cents a share, a year earlier.
Analysts, on average, expected earnings of 77 cents a share, according to Reuters Estimates.
Customer spending growth was generally strong, and credit quality showed few signs of weakening. The average card member spent $2,985 during the quarter, up from $2,778 a year earlier.
The number of outstanding American Express and related cards rose by 1.5 million during the quarter to 78 million.
The New York-based company has done a good job of giving rewards points, or incentives for customers to use their American Express cards, without paying too much for them, said David Roberts, publisher of the Nilson Report, a credit card industry newsletter.
“It’s hard work, but they’re staying ahead of the rest of the industry,” Roberts said.
After first offering incentives for customers to use their American Express cards in places like supermarkets, the company now provides rewards points to customers who buy items online via links on American Express Web sites, Roberts said.
That has helped fuel several quarters of market share gains, Roberts said.
REVENUE UP 13 PCT
Revenue was up 13 percent to $7.21 billion, helped by a 41 percent increase in lending revenue to $990 million.
Credit card issuers including Capital One Financial Corp. and JPMorgan Chase & Co. have reported solid results from their card operations, helped by low default rates.
American Express’ percentage of accounts 90 days past due as a percentage of total is 1.8 percent, up from 1.6 percent in the fourth quarter of 2005.
The stock fell 1 cent to $58.08 on the New York Stock Exchange. American Express shares rose nearly 18 percent last year, while the Dow Jones US Consumer Finance index rose about 7 percent.