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AmEx quarterly earnings rise 24%

January 23, 2007|From the Associated Press

NEW YORK — American Express Co. on Monday reported that stronger holiday shopping and a reduction in bankruptcy write-offs helped lift fourth-quarter profit 24%.

The New York-based financial and travel services company reported a profit of $922 million, or 75 cents a share, compared with $745 million, or 59 cents, a year earlier. Revenue increased 13% to $7.21 billion.

The quarterly results cap a transformative year for American Express, which in 2005 spun off its Ameriprise Financial Inc. unit to focus on its card and travel businesses. Chief Executive Kenneth I. Chenault has focused this year on striking deals with banks to issue American Express cards and capturing more business from high-spending consumers.

"Our strong revenue and earnings this quarter were driven by record card member spending during the holiday shopping season and continued growth in our loan portfolio," Chenault said.

The results follow the same growth seen at American Express' biggest competitors. JPMorgan Chase & Co., Citigroup Inc., Capital One Financial Corp. and Morgan Stanley reported their card divisions had stronger profit during the fourth quarter.

Part of this is because of new U.S. bankruptcy laws that make it harder for consumers to avoid paying debt. American Express, which typically has a lower instance of defaults because its customers tend to be more affluent, set aside $277 million for losses from its credit card unit, a 4% decline from the same period a year earlier.

This helped drive profit higher than the year-earlier period. The year-earlier results included its banking business in Brazil, which American Express sold in the second quarter.

Excluding that business and other discontinued operations, the company reported that fourth-quarter profit rose to $925 million, or 76 cents a share, from $751 million, or 60 cents, a year earlier.

That matched Wall Street projections for earnings of 76 cents a share, according to analysts polled by Thomson Financial. The company, however, missed analysts expectations for revenue of $7.33 billion during the period.

American Express shares slipped 3 cents to $58.06.

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