January 15, 2010
-
News: AXP Looking Good For Fourth Quarter
The top performer in the credit card arena once again comes out looking good. American Express Co. (AXP) reported card delinquencies of 30 days or more dropped slightly to 3.7 percent for the fourth quarter 2009, down from 4.1 percent for the third quarter. It's a modest decrease but never the less a welcomed relief in the wake of some of the highest defaults in history. Delinquencies of 30 days or more typically are a good indication of what's ahead for credit card defaults. Lenders respond to higher delinquencies by tying up additional capital for default reserves. It's welcomed news in the wake of recent mounting credit card defaults reaching historical highs and rising unemployment. As Americans begin filing 2009 income taxes, it is expected a surge of tax refunds will spark taxpayers to continue paying down debt. It's a double edged sword as economic growth is dependent on consumer spending.
For the month of December, AXP suffered 7.1 percent in credit card default losses down from 7.6 percent in November. Fourth quarter write-offs came to 7.5 percent; a significant drop from third quarter results of 8.9 percent. At end of December, AXP wrote off over $52.6 billion in credit card losses. A recent polling reported in Reuters expects AXP shares to post a 55 cent income with total revenue of $6.1 billion for the quarter. This number is more than double the 21 cents a share on $6.5 billion reported in revenue a year ago. It should be noted that the numbers do compare apples to apples due to one-time items and other revenue adjustments.
American Express, one of the nation's largest credit card companies, is unique in that it not only is a lender but is a card network as well. Therefore, the company earns revenue on transaction fees as well as interest income. American Express is a diversified global financial services company headquartered in New York City. They are traded on the New York Stock Exchange (NYSE) under the symbol "AXP." Company shares were recently down .5 percent.