American Express experienced record net income of $896 million for the fourth quarter, which is 17% more than it was a year ago.
Diluted earnings per share rose 20% from a year ago, and the company’s 2004 return on equity was 22%.
“We delivered excellent results for both the fourth quarter and the full year,” said Chairman and CEO Kenneth I. Chenault. “Record levels of cardmember spending along with higher client asset levels generated double digit revenue growth throughout the year. Credit quality remained excellent and reengineering efforts helped to contain our expenses.
Consolidated revenues for the fourth quarter rose 10 percent to $7.8 billion, up from $7.0 billion a year ago. This growth reflects record cardmember spending, higher average cardmember lending balances and strong travel sales. It also reflects increased revenue from higher client asset levels at American Express Financial Advisors (AEFA).
“Cardmember spending and transaction levels were exceptionally strong in the fourth quarter. We generated strong volumes in the U.S. retail and everyday spending categories as spending during the holiday shopping period on American Express cards was the best it has ever been. Travel and entertainment spending also continued to rebound and spending on cards issued by new and existing bank partners continued to grow at high rates. Based on preliminary U.S. industry data for holiday credit card spending, we outpaced our network competitors and gained share at one of the fastest rates during the past five years. Average spending by our cardmembers grew substantially and we continue to have a wide lead over Visa and MasterCard in this key measure.
Consolidated expenses totaled $6.6 billion, up 11 percent from $5.9 billion a year ago. This increase primarily reflects higher expenses for marketing, promotion, rewards and cardmember services and human resources.
“All in all, we generated great momentum and expanded our presence in the market with the addition of nearly five million new cards in force last year. This is one of our largest annual increases and reflects continued expansion of our consumer, small business and corporate base. It also reflects strong growth from our bank partners who issue cards on the American Express network. In the U.S., our partnership with MBNA is off to a great start and we are very pleased with the quality of cards it has added to our network.”
Murdok | Breaking eBusiness News
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