American Express Beats Expectations As Revenue Surges 7%

American Express credit card

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Fourth quarter earnings for American Express beat analyst expectations by two cents, at $1.01 per share, as revenue grew 7% year-on-year.Top line results hit $7.7 billion, pushing full year revenue to $29.9 billion.

“Cardmembers spent a record amount on their American Express cards, continuing a trend that has translated into overall share gains during the last two years,” CEO Kenneth I. Chenault said.

The company’s U.S. Card Services division, its largest unit, generated $727 million in net income, up 4%. While charge-offs jumped in the period, total expenses declined as American Express spent less on marketing and its rewards programs. However, during the year the card processor spent nearly $6.6 billion on member rewards, services, and marketing.

At the end of the quarter, there were 97.4 million cards-in-force, with more than half held in the United States. Average card spending jumped 12% during the year, to $14,881. Fee generation grew at a slower pace, up 3% to $39 per card. 

The percentage of worldwide loans past due by more than 30 days declined 60 basis points during the quarter. However, in the U.S., 1.9% of loans were past due over the same period, up from 1.5% at the end of the third quarter. 

“Revolving credit balances grew, but at a much slower rate than spending as Cardmembers continued to manage their debt and household finances more cautiously. Credit quality remained excellent, with past-due loans and write-offs at historically low levels,” Chenault said.

Shares are down more than 2% in after-hours trading.