While the regulatory issues linger, Amex revenue... - Other News

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Credit Card Applications » News » Other » While the regulatory issues linger, Amex revenue rises

While the regulatory issues linger, Amex revenue rises

While the regulatory issues linger, Amex revenue rises

Ever since the consumer spending increased, the fourth quarter revenue has grown, says AmEx.However, uncertainty over the regulations has overshadowed the ambitions of the company with regard to the future growth.

In the after-hours trading on Monday, shares fell around 1.4% after the payment network as well as the card lender announced the full fourth quarter results.Last week the company posted its profit for the fourth quarter, which fell short of the expected estimates by analysts.

The affluent AmEx customers have always paid their bills in full each month and yet it is turning to the processing business to earn future profits.Here, in this business, the risk is much less than lending but it would have to face the regulations from the so-called Durbin amendment to the ‘U.S. Dodd-Frank financial reform law‘.

Michael Holland stated that while the top line looked very healthy there was still a lot of skepticism in the market.Michael Holland is the chairman, Money Manager Holland & Co, and it includes AmEx shares that are worth over $4 billion in assets that are under management.He feels that as long as the Durbin sword of Damocles is hanging out there, there would be proclivity towards negativism amongst the investors.

As per the fed rules that has been proposed last month (part of the Durbin Amendment) the fees which merchants pay banks each for each swipe the customers make while making a purchase on their card, would be slashed.

While AmEx is not into debit cards, the AmEx credit cards carry the highest merchant fees in the credit card industry.Investors are now worried that they would suffer losses in their business; since merchants can ask their customers to use cheaper debit cards.

AmEx has also been fighting the antitrust lawsuit with the Justice Department over the rules for merchants in the processing business.In spite of closing down the customer service centers and thereby cutting 550 jobs, investors were still not sure about the growth prospects especially due to the increased regulations.

American Express has recovered completely from its financial crisis in comparison with the other lenders.It also competes with MasterCard and Visa Inc. although it directly lends to its customers.

American Express has reported its quarterly revenue of $7.3 billion, and the company stated that its increased earnings were a result of an accounting change and also due to the increased spending by AmEx customers on their cards.

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