AmEx, Advanta Report Poor Quarters, Years

Earnings have continued on the weak side this week with several creditors reporting declines in income due to falling consumer spending.

American Express yesterday reported net income in the fourth quarter of $831 million, down 10 percent, while consolidated revenues net of interest expense rose 10 percent to $7.4 billion. AmEx reported preliminary numbers several weeks ago, warning investors that results for December and the fourth quarter were trending down.

For the full year, AmEx the reported net income from continuing operations of $4.0 billion, up eight percent. Kenneth I. Chenault, chairman and chief executive, said in a statement that AmEx added nearly 8.5 million new cards in 2007.

In the fourth quarter AmEx recorded a gain of $1.13 billion ($700 million after-tax) from its lawsuit with Visa, while spending $74 million ($46 million after-tax) in costs related to the lawsuit.

The firm’s U.S. Card Services division saw its fourth-quarter net income fall nearly 100 percent to $7 million, down from $473 million a year ago, due to rising credit costs and a charge of $408 million related to AmEx’s Membership Rewards program.

AmEx separately announced that its cards would be processed through the Nova network payments subsidiary of U.S. Bancorp.

Small business credit card issuer Advanta Corp. reported today full year 2007 net income from continuing operations of $72.0 million, down from $84.9 million in 2006.

During the year, the Company acquired approximately 335,000 new customers and managed receivables grew approximately 22% to $6.3 billion. For the full year, the managed net credit loss rate was 3.7 percent, up from 3.4 percent in 2006.  

Advanta increased its provision for credit losses in 2007 to $58.2 million from $38.6 million a year ago.