As takeover rumors swirled around American Express Co., its Travel Related Services Co. has released an upbeat fourth-quarter earnings report.

The unit said net income for the quarter grew 12% over the year-earlier period, to $266 million. For the year, the charge card and travel services operation saw net income jump 12.7%, to $1.1 billion.

A Feb. 5 article in Business Week suggested American Express was a merger target. The magazine quoted an investment banker as saying that a "huge financial services company" might propose a $30 billion deal. Prior rumors had mentioned General Electric Co.

An American Express spokeswoman, citing company policy, refused to comment on the report.

Travel Related Services reported a 23.3% increase in its managed loans, to $10 billion at Dec. 31. Worldwide card spending for 1995 was $46.4 million, up 16.8%.

American Express cards in circulation at yearend were up 4%, to 37.8 million.

These results were "pretty much what people expected," according to Salomon Brothers analyst Thomas Facciola. "American Express is coming through a transitional period in which they're reaching to the same consumers but through different products, which they will continue to do in 1996."

In August, American Express announced plans for a cobranded card with Delta Airlines, the top U.S. airline by number of passengers. The following month, the New York company rolled out a second cobranded card, with Hilton Hotel Corp.

Mr. Facciola noted that the bulk of American Express products have annual fees - a feature increasingly less acceptable to consumers. "If there's an annual fee the product has to come with some kind of reward," said Mr. Facciola. "If there's no annual fee there has to be some other revenue source" like revolving credit.

An American Express spokeswoman replied that the company is "moving toward a number of different card products," some of which will not charge annual fees.

She attributed some of the company's 1995 gains to the Optima True Grace card, which has performed well since its September 1994 launch.

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Dean Witter, Discover & Co. reported last week that net income for its Credit Services unit grew 8%, to $446.9 million in 1995. The Riverwoods, Ill.-based unit, which issues the Discover card, reported $62.3 million net income in the fourth quarter, up 20% from the same quarter a year earlier.

In credit card balances, Dean Witter ended the year at $31.8 billion, up from $26.1 billion in 1994.

Dean Witter's 1995 highlights included the launch of Private Issue, a credit card incorporating celebrity paintings, and Bravo, which targets consumers who do not pay their balances in full each month.

Both are being marketed under the Novus umbrella, a network of merchants that accept the flagship Discover card and other brands issued by Dean Witter.

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