AXP American Express Company

By Maria Armental 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 18, 2019).

American Express Co. on Thursday reported solid financial results for the most recent period, capping a record year.

The results -- and a strong forecast for 2019 -- mark a notable recovery for the financial-services company, which a year earlier was driven to the first quarterly loss in more than a quarter-century as it absorbed a hit from the U.S. tax overhaul.

On Thursday, Amex reported a fourth-quarter profit of $2.01 billion, or $2.32 a share, ending the year at a $6.92 billion profit, more than double the $2.75 billion profit for 2017.

Revenue, net of interest expense, rose 8% to $10.47 billion for the quarter and ended the year at $40.34 billion.

It was the highest annual profit and revenue, according to securities filings.

Analysts surveyed by FactSet had projected a profit of $1.80 a share on $10.58 billion in revenue for the quarter and $7.38 a share with $40.44 billion in revenue for the year.

This year, the New York company expects profit to reach $7.85 a share to $8.35 a share and revenue to increase 8% to 10%, compared with analysts' projected $8.15 a share and a 7.5% revenue increase.

Discount revenue, which reflects the fees charged to merchants for accepting AmEx cards, brought in $6.46 billion for the quarter and $24.72 billion for the year, an 8% increase from a year ago.

The company last year scored a major legal victory when the U.S. highest court ruled that AmEx's policy of preventing retailers from offering customers incentives to pay with cheaper cards wasn't anticompetitive.

The credit-card company historically charged retailers higher so-called swipe fees, which typically include a flat fee and a percentage of the dollar amount of a purchase, than many of its competitors' cards.

Card-members rewards, the company's largest single expense that includes such things as points redeemed for hotels and airfare, reached $2.52 billion in the fourth quarter and $9.7 billion for the year, an 11% and 12% increase respectively.

Overall, expenses rose 9% for the quarter and 8% for the year.

AmEx, which has been building its reserves for possible losses, ended the year with a $3.35 billion loss provision, a 21% increase from the previous year, as card-member loans increased.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

January 18, 2019 02:47 ET (07:47 GMT)

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