American Express (NYSE: AXP) reported Monday that its profit in the last three months of 2010 rose 49 percent amid higher customer spending and lower expenses for future defaults.
According to CEO Kenneth Chenault, small companies and corporate customers boosted their spending in the period. Spending by members surged to “record levels” in the last three months and for the full year 2010 as credit trends improved. Customer spending jumped to $197.7 billion, up 15 percent compared with $172.6 billion of 2009.
CFO Dan Henry said that its customers paid their bills in full each month, which was contrary to their carrying balances in the past.
Amex cards make up almost 24% of the total dollar volume of credit card transactions in the US. The card issuer is famous for its charge card, credit card, and traveler’s cheque businesses.
For the latest quarter, after paying preferred dividends, its net income surged to $1.05 billion or 88 cents per share, up from $707 million or 60 cents per share year-on-year.
Revenue increased 13 percent to $7.32 billion, compared with $6.49 billion in 2009. Revenue for the full year 2010 jumped to $27.82 billion from $24.52 billion in 2009. Net income advanced to $4.01 billion against $1.8 billion a year earlier.
Net write-offs dropped 40 percent to $117 million from $194 million in 2009. Also, the percentage of U.S. payments past due by 30 days or more was down from 1.8 percent to 1.5 percent a year ago.
The expense of the biggest U.S. credit-card issuer by purchases increased to $5.61 billion. Spending on salaries and employment benefits increased 31 percent and spending on professional services leapt 27 percent.
The leap in spending was said to reflect investments in new technologies and businesses.
In all, the fourth quarter was the best one with better-than-expected revenue and lower losses on unpaid balances.