(By Balaseshan) American Express Co. (NYSE: AXP) reported a 47% drop in quarterly earnings on higher expenses and rise in provisions for losses. Results came in line with Street's expectations.
Earnings from continuing operations for the fourth quarter were $637 million or $0.56 per share, down from $1.19 billion or $1.01 per share last year. Adjusted earnings per share (EPS) for the latest quarter were $1.09.
Total revenue increased 5% to $8.141 billion, on a 8% rise in cardmember spending and higher net interest income that reflected growth in the cardmember loan portfolio. Adjusted for foreign currency translations, consolidated revenue net of interest expense rose 5%.
Analysts, on average, polled by Thomson Reuters had expected a profit of $1.09 per share on revenue of $8.14 billion for the fourth quarter.
U.S. Card Services revenue increased 4% on higher cardmember spending and a rise in net interest income. International Card Services revenue rose 5%, reflecting higher cardmember spending and fee revenues related to Loyalty Partner.
Global Commercial Services revenue rose 3%, reflecting increased spending by corporate cardmembers, partially offset by lower travel commissions and fees.
Global Network & Merchant Services revenue increased 6%, reflecting higher merchant-related revenues driven by an increase in global cardmember spending.
Cardmember spending rose 8%, despite a brief dip in late October/early November reflecting the impact of Hurricane Sandy on consumers and businesses in the northeastern United States.
Consolidated provisions for losses were $638 million, up 56% from $409 million last year, reflecting higher reserve releases a year ago, partially offset by lower net write-offs in the current quarter.
On January 10, the company said it expects to eliminate about 5,400 jobs to lower operating expenses. The restructuring charge of $400 million, which was included in the fourth quarter results, will consist largely of severance payments related to the jobs elimination.
The company expects overall staffing levels by year end 2013 to be 4% to 6% less than the current total of 63,500. The restructuring plan is expected to be substantially completed by the end of 2013.
AXP closed Thursday's regular session up 0.20% at $60.74. The stock has been trading between $48.84 and $61.97 for the past 52 weeks.