American Express to cut more than 4,000 jobs
American Express Co will cut more than 4,000 jobs this year, an executive said, after the credit card company also reported higher quarterly expenses and provisions for bad loans.
The planned redundancies, from a workforce of nearly 63,000, contributed to a $313 million pre-tax restructuring charge taken by the world's largest credit card issuer during the fourth quarter.
The company's shares fell 2.3 percent to $85.62 after the bell.
American Express, which in recent years has been reining in costs to counter sluggish revenue growth, said expenses rose 3.5 percent to $3.60 billion in the fourth quarter, driven mainly by marketing costs and salaries.
Total provisions for loan losses increased 21.5 percent to $582 million.
Another credit card issuer, Discover Financial Services Inc, reported a 33 percent drop in quarterly profit as it set aside more money to cover bad loans.
The job cuts announced by American Express will take place in the United States and abroad.
"The actions we are taking will impact over 4,000 people at a cost of $313 million in the quarter," Chief Financial Officer Jeff Campbell said on a post-earnings conference call, referring to the planned job cuts.
The company had 62,800 employees at the end of 2013, according to its latest annual report. Four thousand jobs would constitute about 6 percent of its workforce, but Campbell said the cuts will be offset partly by the creation of some new jobs.
Despite higher expenses, fourth-quarter profit rose 10.7 percent as customers in the United States spent more using their AmEx cards. The company also earned higher net interest income.
Net income rose to $1.45 billion, or $1.39 per share, in the fourth quarter ended Dec. 31, from $1.31 billion, or $1.21 per share, a year earlier.
Total revenue, net of interest expense, rose 6.6 percent to $9.11 billion.
The results included a pre-tax gain of $719 million on the sale of the company's investment in expense-software maker Concur Technologies Inc, which Germany's SAP SE agreed to buy for about $7.3 billion in September.
Shares of American Express shares closed at $87.67 on the New York Stock Exchange on Wednesday.