AmEx misses estimates on slowing customer spending; shares drop
(Adds fourth-quarter details, analyst comment, industry
background; updates shares)
Jan 17 (Reuters) - American Express Co missed Wall
Street's fourth-quarter profit estimates on Thursday, as the
rate of customer spending slowed despite a strong U.S. holiday
The credit-card issuer's shares fell 2.4 percent in extended
"For the past couple of quarters card spending for AmEx in
the U.S. has been 10 percent, that dropped down to about 9
percent this quarter, that is having an effect on the stock,"
Buckingham Research Group analyst Chris Brendler said.
The slowing growth came despite the United States witnessing
its strongest holiday season in six years on the back of a
robust economy and more deals. According to a Mastercard report
on Dec. 26, holiday spending rose 5.1 percent to over $850
This strong health of the consumer spurred more customers to
take loans on credit cards in the quarter, growing AmEx's loan
portfolio by 12 percent in the fourth quarter. However, this
also drove provisions for credit losses higher by 14 percent.
Meanwhile, expenses rose 9 percent as AmEx poured more money
into offering perks such as rewards programs and lounge access
at airports to better compete against companies such as
JPMorgan's Chase cards division and payment networks
Visa and Mastercard.
Card member rewards expenses rose 11 percent, AmEx said.
The company said https://reut.rs/2RyxpFO its net income was
$2.01 billion, or $2.32 per share, in the quarter ended Dec. 31,
compared with a loss of $1.21 billion, or $1.42 per share, a
year earlier, when it took a charge due to a change in U.S. tax
Excluding items, the company earned $1.74 per share, missing
analysts' average estimate of $1.80, according to IBES data from
Revenue, net of interest expense, rose 7.9 percent to $10.47
billion, but fell short of analysts' estimates of $10.56
(Reporting by Diptendu Lahiri in Bengaluru; Editing by Maju
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