American Express Company (NYSE: AXP) said today that cardmember spending, revenue growth and credit quality remained strong during the fourth quarter despite an uneven economy.
Net income for the quarter, however, reflects costs associated with three items:
- A $400 million restructuring charge ($287 million after-tax) designed to contain future operating expenses, adapt parts of the business as more customers transact online or through mobile channels, and provide the resources for additional growth initiatives in the U.S. and internationally.
- A $342 million expense ($212 million after-tax) reflecting enhancements to the process that estimates future redemptions of Membership Rewards points by U.S. cardmembers.
- Approximately $153 million ($95 million after-tax) of cardmember reimbursements for various types of transactions dating back several years. This amount deals with fees, interest and bonus rewards as well as an incremental expense related to the consent orders entered into with regulators last October.
Fourth Quarter Results
After reflecting the impact of these items, net income for the quarter was $637 million, or $0.56 per share.Excluding these items, fourth quarter adjusted net income was $1.2 billion, or $1.09 per share. 1 For the year ago period, net income was $1.2 billion, or $1.01 per share. Fourth quarter consolidated total revenues net of interest expense were $8.1 billion, up 5 percent from $7.7 billion a year ago. Cardmember spending was 8 percent higher than a year ago, despite a brief dip in late October/early November reflecting the impact of Hurricane Sandy on consumers and businesses in the northeastern United States. Credit indicators remained at historically low levels. The write-off rate for the U.S. lending portfolio (principal only) was 2.0 percent for the quarter. Fourth quarter and full year 2012 results will be released as scheduled on January 17, 2013.
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