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American Express Misses on EPS, Beats on Revenue

NEW YORK ( TheStreet) -- American Express (AXP - Get Report) late on Thursday announced a 5% year-over-year increase in fourth-quarter revenue, but its bottom-line earnings results were below analysts' expectations.

The card lender and payment processor said it earned $1.308 billion during the fourth quarter, or $1.21 a share, on revenue of $8.547 billion.  Earnings fell short of the consensus estimates of $1.343 billion, or $1.26 a share, among analysts polled by Thomson Reuters, although the revenue figure came in ahead of the consensus estimate of $8.540 billion. 

Earnings were up from $637 million, or 56 cents a share, during the fourth quarter of 2012, when the company booked $594 million in charges, after tax, for restructuring, enhancements to its rewards program and reimbursements to customers springing from a settlement with regulators over the cross-selling of "credit protection" services to customers.

For all of 2013, American Express earned $5.359 billion, or $4.88 a share, on revenue of $32.974 billion, increasing from earnings of $4.482 billion, or $3.89 a share, on revenue of $31.555 billion, during 2012.

The company reported returns on average equity (ROE) of 27.8% for the fourth quarter and for 2013.  The full-year ROE was up from 23.1% during 2012.

Shares of American Express were up 0.2% in aftermarket trading, to $88.12.

Fourth-quarter noninterest revenue was up 4% year-over-year, to $7.228 billion, while noninterest revenue also grew 4% year-over-year, to $27.927 billion.

Net interest income for the fourth quarter rose 11% from a year earlier to $1.319 billion.  Net interest revenue for all of 2013 rose 9% to $5.047 billion.

American Express said its operating expenses were "well contained" during the fourth quarter, totaling $6.039 billion, for a decline of 8% from a year earlier, because of the above mentioned special items during the fourth quarter of 2012.  For all of 2013, operating expenses totaled $22.976 billion, down 1% from a year earlier.

"Fourth quarter results reflected a healthy increase in billed business in the U.S. and internationally," said American Express CEO Kenneth Chenault in the company's earnings release.  He also said the company "ended the year on a strong note, with Card Member spending up 8 percent despite mixed reports during the holiday shopping season."
"Credit quality indicators are at historically strong levels and, while many consumers are still cautious about taking on additional debt, we again saw a modest increase in Card Member loans this quarter," Chenault added.

This table shows the performance the company's stock against the Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) since the end of 2011:

AXP Chart data by YCharts


-- Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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