American Express said on Monday its fourth-quarter earnings tumbled 72 percent due to higher loan losses, lower customer spending and a strengthening U.S. dollar, but results beat expectations as it slashed costs.
Earnings from continuing operations sank to $238 million, or 21 cents per diluted share, from $858 million, or 74 cents per diluted share, in the same quarter last year.
The latest results topped the average analyst expectation of 9 cents per share for earnings from continuing operations, according to Reuters Estimates.
The company offered a guarded forecast for this year. "We remain cautious about the economic outlook through 2009, and expect cardmember spending to remain soft with past-due loans and write-offs rising from current levels," Kenneth Chenault, chairman and chief executive, said in a statement.
Net income, including discontinued operations, fell to $172 million, or 15 cents per diluted share, from $831 million, or 72 cents per diluted share, a year earlier.
Consolidated revenue fell 11 percent to $6.5 billion.
U.S. net charge-offs—a measure of cardholder defaults—jumped to 6.7 percent in the fourth quarter from 5.9 percent in the third quarter.
But the company cut expenses by 15 percent in its U.S. card business as part of a plan to save $1.8 billion in its biggest restructuring since 2001.
"Our fourth quarter results reflect an operating environment that was among the harshest we have seen in decades," Chenault said.
The company, struggling with mounting credit losses and higher financing costs, changed into a bank holding company in November in order to get access to $3.39 billion in taxpayer money under the U.S. Treasury's Troubled Asset Relief Program.
Rivals Discover Financial Services and Capital One Financial have said credit losses will continue to rise in 2009 as Americans struggled with a deepening recession and the highest U.S. unemployment rate in 16 years.
American Express shares rose over 3 percent to trade above $15 in after-hours trading after closing at $15.20, down 5 percent on the New York Stock Exchange. The company's stock has lost 14 percent in 2009.
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