Amex Misses In Q4 Amid Lending Write-Offs

American Express posted earnings results on Thursday (Jan. 17) after markets closed that missed the Street, as merchant and services revenues were both below expectations, and write-offs tied to its lending business grew. Specifically, card member loan provisions were $679 million, up 21 percent from last year.

In terms of headline numbers, revenues of roughly $10.5 billion were below expectations $10.6 billion. Adjusted earnings were $1.74, which missed consensus estimates by six pennies.

Consolidated provisions for losses totaled at $954 million, up 14 percent from $834 million, which the company said in its release was tied to growth in the loan portfolio and higher lending write-off rates. Total loans were up 12 percent to $81.9 billion. The total of 30 days past due in this segment was 1.4 percent, up by about 10 basis points from the third quarter of 2018.

Drilling down a bit, results from consumer and commercial services rose, but showed less transactions in the merchant and network services operations. In the consumer group, revenues were up 11 percent to $5.6 billion, and commercial services saw growth of 8 percent to revenues of $3.3 billion. Merchant services sales were unchanged from last year at $1.6 billion.

Net card fees were up 11 percent year on year, according to filings, to $897 million.

The company said that billed business, which reflects activities related to cards, was up 10 percent worldwide tied to consumer cards, and commercial cards were up 9 percent. Total billed business was $136.6 billion. Total cards in force were up 7 percent to 54.5 million, according to filings. Average member spend was up 4 percent to a bit more than $3,500.

The company said its total net write-off rate was 1.5 percent (principal only), unchanged from last year. The 30 days’ past due rate was also unchanged at 1.2 percent, as compared to a year ago.