American Express Company reported fourth quarter diluted earnings per share of $0.88, down 1 percent from $0.89 a year ago.
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Excluding a restructuring charge related to cost reduction efforts, adjusted diluted earnings per share was $0.91.
Fourth-quarter net income was $825 million, down 8 percent from $899 million a year ago.
The current quarter included higher spending on growth initiatives, largely reflected in marketing and promotion expenses.
The company showed significant progress on its plans to reduce its cost base by $1 billion.
Credit quality remained strong, and the company continued to return a substantial amount of capital to its shareholders through share repurchases and dividends.
Fourth-quarter consolidated total revenues net of interest expense were $8.0 billion, down 4 percent from $8.4 billion a year ago.
Excluding last year’s Costco-related business and the effect of foreign exchange rates due to the impact of a stronger U.S. dollar on international operations during the quarter, adjusted revenues net of interest expense increased 6 percent.
That increase primarily reflected higher adjusted Card Member spending and adjusted net interest income.
Consolidated provisions for losses were $625 million, up 9 percent from $572 million a year ago, primarily reflecting higher loan growth.
The prior year included credit costs associated with cobrand portfolios that were subsequently sold.
Excluding the impact of those portfolios, adjusted provisions for losses increased 20 percent,4 primarily reflecting higher loan growth and a slight increase in both lending delinquency and net write-off rates.
Consolidated expenses were $6.2 billion, down 2 percent from $6.4 billion a year ago.
The prior year included an impairment and restructuring charge of $419 million ($335 million after-tax) as well as Costco-related rewards costs.
The current quarter reflected substantially higher levels of investment spending on growth initiatives and a $50 million ($32 million after-tax) restructuring charge mentioned above.
The effective tax rate for the quarter was 29 percent, down from 38 percent a year ago.
The decrease primarily reflected the resolution of certain prior years’ tax items in the current period, and non-deductible impairment charges in the prior period.
The company’s return on average equity (ROE) was 26.0 percent, up from 24.0 percent a year ago.
For the full year, the company reported net income of $5.4 billion, up 5 percent from $5.2 billion a year ago. Diluted earnings per share was $5.65, compared to $5.05 a year ago.
Excluding restructuring charges related to cost reduction efforts, adjusted diluted earnings per share was $5.93.2 Earnings for the full year were within the company’s 2016 guidance range.
Revenues net of interest expense for the full year decreased 2 percent to $32.1 billion, from $32.8 billion a year ago. Excluding last year’s Costco-related business and the impact of foreign exchange rates, adjusted revenues net of interest expense increased 5 percent.
For the full year, consolidated expenses decreased 4 percent to $22.0 billion from $22.9 billion a year ago. ■