“We continue to see very good returns on the investments we’ve been making to gain share and add scale,” said Stephen J. Squeri, chairman and chief executive officer. “Our growth throughout 2018 was broad-based and well-balanced across geographies and business lines. Card Member spending rose an fx-adjusted 8 percent, lapping a strong year-ago quarter. This was the sixth consecutive quarter with revenue growth of at least 8 percent, and it was driven again by higher Card Member spending, loans and card fees.
Press Release
American Express
JANUARY 17, 2019
American Express Reports Fourth Quarter Earnings Per Share of $2.32 and Full Year EPS of $7.91
STRONG 2018 REVENUE GROWTH REFLECTS HIGHER CARD MEMBER SPENDING, LOANS AND CARD FEES
NEW YORK
American Express Company (NYSE: AXP) today reported fourth-quarter net income of $2.0 billion, or $2.32 per share, compared with a net loss of $1.2 billion, or $1.42 per share, a year ago.
The current period included $496 million, or $0.58 per share, of certain discrete tax benefits. The year-ago period included a charge of $2.6 billion, or ($2.99) per share, related to the Tax Cuts and Jobs Act (the “Tax Act”).
Fourth-quarter consolidated total revenues net of interest expense were a record $10.5 billion, up 8 percent from $9.7 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10 percent.2 The rise reflected higher Card Member spending, loan volumes and card fees.
Consolidated provisions for losses were $954 million, up 14 percent from $834 million a year ago. The increase reflected growth in the loan portfolio and higher lending write-off rates.
Consolidated expenses were $7.7 billion, up 9 percent from $7.1 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs, which were partially offset by lower operating expenses.
The consolidated effective tax rate was (9.8) percent, down substantially from a year ago. The $496 million tax benefit mentioned above reflected changes in the tax method of accounting for certain expenses; the resolution of certain prior years’ tax audits; and an adjustment to the company’s 2017 provisional tax charge related to the Tax Act. The effective tax rate for the quarter excluding these items was 17.3 percent.4
For the full year, the company reported net income of $6.9 billion, compared with net income of $2.7 billion a year ago. Earnings per share were $7.91, compared with $2.99 a year ago.
Revenues net of interest expense for the full year were a record $40.3 billion, up 9 percent (10 percent FX adjusted2) from $36.9 billion a year ago.
Consolidated expenses for the full year increased 8 percent to $28.9 billion from $26.7 billion a year ago.
“We continue to see very good returns on the investments we’ve been making to gain share and add scale,” said Stephen J. Squeri, chairman and chief executive officer. “Our growth throughout 2018 was broad-based and well-balanced across geographies and business lines. Card Member spending rose an fx-adjusted 8 percent, lapping a strong year-ago quarter. This was the sixth consecutive quarter with revenue growth of at least 8 percent, and it was driven again by higher Card Member spending, loans and card fees.
“The total revenue we generated in 2018 was well above our initial expectations and gave us the flexibility to make additional investments in the business each quarter. We added 12 million new cards during the year, continued to enhance the range of benefits we offer, and continued to significantly expand the number of merchants in our network. Robust top line growth, consistently good credit quality and the leverage we get from disciplined control of operating expenses delivered strong earnings per share each quarter.
“We remain focused on four strategic priorities:
Expand leadership in the premium consumer space
Build on our strong position in commercial payments
Strengthen our global integrated network to provide unique value and
Make American Express an essential part of our customers’ digital lives.
We’ve made great progress on each of them and feel very good about the competitive advantages that come from our business model.
“Our focus is on continuing to make the investments that can drive higher revenue growth, which is the foundation for consistent, double-digit EPS growth. While there are mixed signals in the political and economic environment, based on what we see in the business we are starting 2019 from a position of strength. We expect full year 2019 revenue growth to be between 8 and 10 percent and EPS to be between $7.85 and $8.35, subject to contingencies.”
