American Express reported a 44% jump in the quarterly profit as reported on late Monday even as there was a significant surge in the expenses of the cardholders of the company. The 4th quarter net income was around 1.1 billion dollars, which meant earnings of about 88 cents per share. A year ago, the earnings were less at 60 cents per share or a total net income of 716 million dollars. The adjusted earnings per share were about 94 cents according to the company. According to the company’s statement last week, 113 million dollars would be required to cover the costs of lay off or relocating thousands of employees of the company after shutting down the service centre in North Carolina.
After recognising these 4th quarter charges, the company said it would report 1.1 billion dollar income. The yearly revenue as reported by the company was 7.3 billion dollars, which represented a 13% hike from what it was a year ago. This was largely on the back of the requirement that creditors should show securitized loans and other such debt onto the balance sheets of the company.
The revenue of the company has also increased due to the increase spending of the card members in recent times. According to the company, the increase in the revenues of the company was also because of high travel commissions and charges earned by American Express on its credit cards. Some of this additional income though was offset by lower interest income on the smaller loan portfolio of the company as well as lower yields on that particular portfolio. According to a statement released by the chief executive of American Express, Kenneth Chenault, the card member spending has gone u by 15% in this period. This has helped the company hit an all time record for this quarter, as well as for the previous year.
239 million dollars have been set-aside for provisions by the company to cover losses due to loans in the 4th quarter. This has come down from 748 million dollars during the same period a year ago representing a significant drop. This is because there has been strengthening of credit indicators resulting in a decline in the amount that had to be set aside for problem loans. Although there are concerns around unemployment rates, other aspects of the economy are showing good signs. The shares of AmEx slipped 1.3%.