Profits Up at Amex's Card, Travel Business

American Express Travel Related Services Co. reported net income of $998 million in 1994, a 13% increase from 1993, and $237 million in the fourth quarter, up 14%.

Travel Related Services, which includes the company's card and travel agency businesses and accounts for more than 70% of consolidated revenues, also said cards in the United States increased in 1994 by less than one million, or 2.3%, to 25.3 million.

Basic consumer cards in force domestically, including charge cards and Optima True Grace, grew just 0.4% in 1994, to 11.5 million. Basic corporate products, however, jumped 8.7%, to 7.1 million.

Total cards worldwide, including the United States, were up by 2.5%, to 36 million, and basic consumer and business cards worldwide rose 3%, to 26.7 million.

In the last three months alone, consumer cards in the United States rose by 400,000, said Guy Moskowski, an analyst at Sanford C. Bernstein & Co. "That is much more than it has been in many, many quarters."

He said American Express' True Grace Optima card, launched in September, is largely responsible for the account growth.

True Grace cardholders contributed to a 17.5% increase in finance charge revenue in the fourth quarter, to $345 million from $294 million the year before.

Balances rose 5% from the third quarter, to about $8.2 billion.

Total card-billed business in the United States jumped 12.6%, to $101.2 billion in 1994. "The amount card members spend on their cards continues to grow," a company spokeswoman said. In the fourth quarter, U.S. billed business rose 13.2%, to $27.7 billion.

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Just as Travel Related Services helped American Express' overall earnings, the Discover card business had a positive impact on Dean Witter, Discover & Co.

The company's credit services unit increased net income for the year by 30%, to $414.7 million, while the entire company was up 23%, to $603.6 million.

Card services' net income fell to $51.9 million in the fourth quarter, from $63.6 million in the 1993 period. The unit's operating expenses were up 30% due to volume-related rebate payments, direct mail, and other promotions.

Dean Witter chairman and chief executive Philip J. Purcell said he was pleased with the entire 1994 picture, particularly credit services' growth in receivables and numbers of accounts.

Managed loans, including $9.9 billion of securitized loans, rose to $26.1 billion at yearend, from $21.2 billion a year earlier. Discover card accounts increased by 2.8 million, to 32.1 million, and transaction volume was up 20%, to $39.4 billion.

Discover, based in Riverwoods, Ill., signed up 288,000 new merchants last year, for a total of 2.1 million.

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Advanta Corp., the Horsham, Pa.-based financial services company, reported record earnings for the fourth quarter and the year.

Receivables expanded by $2.6 billion in 1994, to $6.5 billion at yearend. The 67% growth rate topped the rises of two other credit card specialists: MBNA Corp.'s 51.7%, to $18.7 billion, and First USA Inc.'s 103.4%, to $11 billion.

In the fourth quarter, Advanta's receivables grew by $1.4 billion. Net income for the quarter was $28.6 million, a 24% increase from the 1993 period. Earnings rose 36% for the year, to $106.1 million.

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Capital One Financial Corp., the recent credit card spinoff of Signet Banking Corp., reported a decline in fourth-quarter earnings.

Richard D. Fairbank, Capital One's chief executive, said the income decline, from $40.6 million in 1993 to $26.5 million in 1994, was due to "the short-term effects of the separation" from Richmond, Va.-based Signet.

For all of 1994, net income dipped to $95.3 million, from $110.5 million in 1993.

"For both the quarter and the year, we had very successful results in light of the substantial cost of separation," Mr. Fairbank said.

The credit card specialist, based in Falls Church, Va., reported $7.4 billion of receivables at yearend, up from $4.8 billion in 1993, and 5,049,000 accounts, up from 3,118,000.

- Lisa Fickenscher contributed to this article.

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