Credit card operator American Express (AXP) swung to a profit in the fourth quarter from a loss last year as an increase in cardmember spending, loan volumes and card fees drove revenues higher. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.
Net income was $2.01 billion or $2.32 per share compared to a loss of $1.21 billion or $1.42 per share in the previous year quarter. The latest quarter included $496 million of certain discrete tax benefits while the prior year included a charge of $2.6 billion related to the tax reform.
Higher cardmember spending, loan volumes and card fees drove consolidated revenues higher by 8% to $10.47 billion. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10%.
Looking ahead into the full year 2019, the company expects revenue growth in the range of 8% to 10%. Adjusted earnings are anticipated to be in the range of $7.85 to $8.35 per share.
For the third quarter, growth in the loan portfolios and higher lending write-off rate dragged provisions for losses higher by 14%. Consolidated expenses rose 9% on higher rewards and other customer engagement costs.
Revenue from Global Consumer Services Group increased 11% year-over-year on higher loans, cardmember spending, and card fees. Higher cardmember spending drove revenues from Global Commercial Services higher by 15%. Revenue from Global Merchant and Network Services remained flat as a decrease in the average discount rate and lower revenues from network partners offset higher cardmember spending.
Shares of American Express ended Thursday’s regular session up 0.08% at $99.49 on the NYSE. The stock has fallen over 1% in the past year and over 4% in the past three months.
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