AmEx profit triples, beating expectations

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- American Express Co. reported stronger-than-expected fourth-quarter earnings Thursday, driven by a climb in cardholder spending.

The New York-based credit card giant posted a profit of $716 million, or 60 cents per share, during the three months ended Dec. 31, almost a three-fold jump from a year earlier.

The results included several one-time charges. Adjusted earnings based on continuing operations were 59 cents per share. On the same basis, analysts polled by Thomson Reuters were expecting 57 cents per share.

Revenue was flat at $6.5 billion compared with the same period in 2008, but it beat analysts' forecast of $6.1 billion.

Since revenue has been stuck around $6 billion for the last three quarters, Stifel Nicolaus analyst Chris Brendler said the return to last year's level is a significant improvement.

The ability of cardholders to keep up with payments also improved, with the rate at which loans turned bad falling to 7.5% from 8.9% the previous quarter. But the rate is still near historic highs for the company and rose from 6.7% a year ago.

And after double-digit declines for four consecutive quarters, cardholders spent $172.6 billion compared with $160.5 billion a year ago.

"We ended the year on a positive note with cardmember spending up 8% and credit indicators showing further signs of improvement," AmEx chairman and chief executive Kenneth I. Chenault said in a statement.

During a conference call with analysts, AmEx executive vice president and chief financial officer Daniel Henry said spending during the first 20 days of the year has been as healthy as what the company saw during the fourth quarter.

Despite the encouraging sign, he also warned that it is too early conclude that economic setbacks are over and noted that record unemployment levels will continue to challenge the company and its customers.

But Brendler also said the jury is still out on a consumer recovery.

"It looks like things are better, but it's too early to tell whether or not this is a real turn in spending," he said.

For the full year, AmEx reported a profit of $2.1 billion, or $1.54 per share, on revenue of $24.5 billion. That compared with earnings of $2.7 billion, or $2.32 per share, on revenue of $28.4 billion in 2008.

Shares of American Express (AXP, Fortune 500) fell almost 2.8% in after-hours trading, after falling almost 2% during regular hours. To top of page

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