FILE - In this Monday, July 18, 2016, file photo, American Express credit cards are photographed in North Andover, Mass. American Express Co. reports financial results Thursday, Jan. 17, 2019. (AP Photo/Elise Amendola, File)

American Express posts 4Q profit that tops forecasts

January 17, 2019 - 5:38 pm

NEW YORK (AP) — American Express swung to a fourth-quarter profit, the credit card company said Thursday, helped by a lower tax rate and more spending on the company's namesake credit cards.

The New York-based company earned $2.01 billion, or $2.32 a share, compared with a loss of $1.21 billion, or $1.42 a share, from the same period a year earlier. Like other financial companies, American Express' results a year ago were impacted by the passage of the new tax law, which required AmEx to make an accounting adjustment.

AmEx's net income for the latest quarter came in well above analysts' expectations, which were looking for the company to earn $1.80 a share, according to FactSet.

American Express continues to face a much more competitive industry, with big banks such as JPMorgan Chase and Citigroup creating their own premium credit card products to compete with AmEx.

In response AmEx has had to offer more rewards and perks with its cards. It spent $2.52 billion on rewards in the fourth quarter, up 11 percent from a year earlier.

But in the fact of more competition, AmEx has been able to encourage more customers to open accounts and spend more on its cards. AmEx card members spent $309 billion on their cards in the quarter, up 6 percent from a year earlier. It earns a fee every time its cards are used at a merchant. Total cards issued by AmEx were up 7 percent in the U.S., the company's largest market.

AmEx also has been encouraging its existing customers to revolve a balance as well, a change from the company's historic business model that focused on getting customers to pay their full balance each month. U.S. card member loans were $72 billion in the quarter, up from $64.5 billion in the same period a year ago.

Revenue in the quarter was $10.47 billion, less than the $10.58 billion that analysts had been looking for.

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