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American Express shares rise after results
10.20.08, 5:38 PM ET
NEW YORK, Oct 20 (Reuters) - Shares of American Express Co rose 5.6 percent in extended trade on Monday after the credit card and business services company reported its quarterly results.
http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/20/afx5580238.html
Consumer spending, the biggest part of the U.S. economy, is likely to falter as job losses mount. Borrowing by U.S. consumers fell $7.9 billion in August, the biggest drop since the Federal Reserve began tracking the figures in 1943.
The credit-card industry's default rates are ``all but certain'' to surpass post-recession peaks reached in 2003, Moody's Investors Service said in an Oct. 16 report. Unemployment may rise until the fourth quarter of 2009, pushing the default rate to a peak of about 8.5 percent from 6.82 percent in August, Moody's said.
Chenault withdrew in July an earnings-per-share growth forecast of 4 percent to 6 percent this year and said the company wouldn't meet longer-term targets until the U.S. economy improves.
Billionaire Warren Buffett's Berkshire Hathaway Inc. owns the largest American Express stake with 151.6 million shares, 13 percent of outstanding stock at year-end, according to Bloomberg data.
Weaker Economies
``The recent volatility in the financial markets has reinforced our view that consumer and business sentiment is likely to deteriorate further, translating into weaker economies around the globe well into 2009,'' Chenault said. ``Card member spending is likely to remain soft.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7vbow4DiXbg&refer=home
American Express CEO: Co Can Take Part In Fed's CP Program
20 Oct 08 18:06 By Aparajita Saha-Bubna Of DOW JONES NEWSWIRESNEW YORK -(Dow Jones)- American Express (AXP) is eligible to take part in the commercial paper program announced recently by the Federal Reserve, easing liquidity concerns at the credit-card issuer amid the current credit freeze.
"We feel good about our funding position," said Kenneth Chenault, American Express' chairman and chief executive officer, during a post-earnings discussion for analysts and investors.
"The focus is on staying liquid," said Chenault. The company is "investing very selectively in growth opportunities."
Unlike many of its peers, American Express is not a deposit-taking company. Its funding sources include the debt markets and the commercial paper market for short-term funds. Like other borrowers, it is facing higher rates in these markets. In addition, investors in the commercial paper market are willing to lend only for very short periods of time, compounding the woes of companies relying on this type of debt.
American Express will be in a position to take advantage of the Fed program, which aims at providing liquidity in the commercial paper market in an effort to thaw the credit freeze.
The company, known for its well-heeled borrower base, said earlier this month in a regulatory filing that it has adequate funds to see it through the next 12 months in case it couldn't access the capital markets.
In an effort to shore up capital, Chief Financial Officer Dan Henry said Monday the company will not buy back its stock. American Express has managed credit-card loans - that is, those credit-card loans on its books and those that it has securitized - of $75.6 billion.
Earlier Monday, the company reported third-quarter results. Its net income fell 24% as it posted another big loan-loss provision and suffered a slowdown in member spending and lending volumes.
Shares traded up three cents in after-hours trading after closing Monday at $ 24.35.
The credit-card company reported net income of $815 million, or 70 cents a share, down from $1.07 billion, or 90 cents a share, a year earlier.
Earnings from continuing operations were 74 cents, down from 94 cents a year earlier. Year-earlier results included an $81 million pretax charge related to the contracted sale of American Express International Deposit Company. Analysts polled by Thomson Reuters expected earnings of 59 cents a share. Total revenue rose 0.5% to $8.01 billion. Revenue net of interest expense rose 3% to $7.16 billion.
Total provisions for loan losses, or money squirreled away to cover soured loans, jumped 51% to $1.37 billion. The U.S. card services division saw a 48% increase in its provision for losses, while the global division saw a 43% rise.
Return on equity, an important measure of profitability at financial companies, dropped to 27.8% from 38.2%. American Express said 30-day delinquencies in its managed U.S. lending portfolio rose to about 3.9% from 3.3% in the second quarter, and the portfolio write-off rate was up to about 5.9% from 5.3% for the same periods.
http://www.nyse.com/interface/jsp/N...ewsHeadlines&sid=ON 10/20 543&isdowjones=true
10.20.08, 5:38 PM ET
NEW YORK, Oct 20 (Reuters) - Shares of American Express Co rose 5.6 percent in extended trade on Monday after the credit card and business services company reported its quarterly results.
http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/20/afx5580238.html
Consumer spending, the biggest part of the U.S. economy, is likely to falter as job losses mount. Borrowing by U.S. consumers fell $7.9 billion in August, the biggest drop since the Federal Reserve began tracking the figures in 1943.
The credit-card industry's default rates are ``all but certain'' to surpass post-recession peaks reached in 2003, Moody's Investors Service said in an Oct. 16 report. Unemployment may rise until the fourth quarter of 2009, pushing the default rate to a peak of about 8.5 percent from 6.82 percent in August, Moody's said.
Chenault withdrew in July an earnings-per-share growth forecast of 4 percent to 6 percent this year and said the company wouldn't meet longer-term targets until the U.S. economy improves.
Billionaire Warren Buffett's Berkshire Hathaway Inc. owns the largest American Express stake with 151.6 million shares, 13 percent of outstanding stock at year-end, according to Bloomberg data.
Weaker Economies
``The recent volatility in the financial markets has reinforced our view that consumer and business sentiment is likely to deteriorate further, translating into weaker economies around the globe well into 2009,'' Chenault said. ``Card member spending is likely to remain soft.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7vbow4DiXbg&refer=home
American Express CEO: Co Can Take Part In Fed's CP Program
20 Oct 08 18:06 By Aparajita Saha-Bubna Of DOW JONES NEWSWIRESNEW YORK -(Dow Jones)- American Express (AXP) is eligible to take part in the commercial paper program announced recently by the Federal Reserve, easing liquidity concerns at the credit-card issuer amid the current credit freeze.
"We feel good about our funding position," said Kenneth Chenault, American Express' chairman and chief executive officer, during a post-earnings discussion for analysts and investors.
"The focus is on staying liquid," said Chenault. The company is "investing very selectively in growth opportunities."
Unlike many of its peers, American Express is not a deposit-taking company. Its funding sources include the debt markets and the commercial paper market for short-term funds. Like other borrowers, it is facing higher rates in these markets. In addition, investors in the commercial paper market are willing to lend only for very short periods of time, compounding the woes of companies relying on this type of debt.
American Express will be in a position to take advantage of the Fed program, which aims at providing liquidity in the commercial paper market in an effort to thaw the credit freeze.
The company, known for its well-heeled borrower base, said earlier this month in a regulatory filing that it has adequate funds to see it through the next 12 months in case it couldn't access the capital markets.
In an effort to shore up capital, Chief Financial Officer Dan Henry said Monday the company will not buy back its stock. American Express has managed credit-card loans - that is, those credit-card loans on its books and those that it has securitized - of $75.6 billion.
Earlier Monday, the company reported third-quarter results. Its net income fell 24% as it posted another big loan-loss provision and suffered a slowdown in member spending and lending volumes.
Shares traded up three cents in after-hours trading after closing Monday at $ 24.35.
The credit-card company reported net income of $815 million, or 70 cents a share, down from $1.07 billion, or 90 cents a share, a year earlier.
Earnings from continuing operations were 74 cents, down from 94 cents a year earlier. Year-earlier results included an $81 million pretax charge related to the contracted sale of American Express International Deposit Company. Analysts polled by Thomson Reuters expected earnings of 59 cents a share. Total revenue rose 0.5% to $8.01 billion. Revenue net of interest expense rose 3% to $7.16 billion.
Total provisions for loan losses, or money squirreled away to cover soured loans, jumped 51% to $1.37 billion. The U.S. card services division saw a 48% increase in its provision for losses, while the global division saw a 43% rise.
Return on equity, an important measure of profitability at financial companies, dropped to 27.8% from 38.2%. American Express said 30-day delinquencies in its managed U.S. lending portfolio rose to about 3.9% from 3.3% in the second quarter, and the portfolio write-off rate was up to about 5.9% from 5.3% for the same periods.
http://www.nyse.com/interface/jsp/N...ewsHeadlines&sid=ON 10/20 543&isdowjones=true
