The American Express Credit Card (AmEx) has posted a 48% increase in its profits in the fourth quarter. As its card members spending habits have amplified, the company has also set a new record based on this increase, which has now enabled them to have trimmed their previous loss significantly.
According to the New York-based AmEx, last year their net income was $716 million, which converged at $0.60 per share. However, based on current market conditions the current income is $1.1 billion and there has been an increase in their stock share. Their unit price had increased by an additional $0.20, now making it $0.80 per unit.
On January 19, preliminary results were released and the total revenue had advanced by 13%; there was a 15% gain due to card member spending. This gain showed a $6.5 billion industry being amplified to $7.3 billion.
Throughout the recession, AmEx’s CEO, Kenneth I. Chenault, retained the profitability of the company. He stated that the rebound spending is because of the affluent customers and their credit card spending habits. Among the six major US card companies, AmEx had reported the lowest delinquency and default rates, as its focus was on the flagship charge card that caters to the affluent customers, or the high spenders, which requires the full bill payment each month.
The shares of the American Express have advanced by 6.7% this year. In the composite trading, the shares had fallen $0.21 and had dropped by 1.4% during the extended hours.
This is inclusive of a charge of $74 million at $0.06 per share, which was tied to job loss in the servicing network, according to lenders.The card income in the US has risen to 70% initiating a $701 million revenue, and another 48%, indicating $102 million in the international card income.
The billed business, in addition to worldwide card spending, totaled $197.7 billion during the fourth quarter. The previous year was only $172.6 when compared, stated AmEx in a statement issued today.Individual spending averaged at $3,629 during the three months, which ended December 31. This was a definite increase of 13% from the fourth quarter for the previous year 2009, when there were only a few cards outstanding.
A default decreases the amount that needs to be set aside for problematic loans, stated Chenault.However, the housing and unemployment levels remain a concern but the rest of the economy has shown consistent progress.