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Citing effects of the economic downturn, American Express Co. yesterday reported net income of $4 million for its U.S. Card Services division for the fourth quarter ended Dec. 31, a 42.9% decline from $7 million for the same period in 2007. Division revenues net of interest expense were $3.22 billion, down 13% from $3.7 billion. The net charge-off rate for managed U.S. card receivables increased 330 basis points, to 6.7% from 3.4%. The company's provision for loan-loss reserves for U.S. cards fell 7.1%, to $1.05 billion from $1.13 billion. Kenneth I. Chenault, AmEx chairman and CEO, told analysts during a conference call yesterday that the economic slowdown has had a pronounced effect on the affluent sector, which contributed to the sharp increase in AmEx's charge-offs. Fourth-quarter net income for AmEx's International Card Services division was $36 million. That compares with a $68 million loss for the same period in 2007. Revenues were $1.09 billion, up slightly from $1.08 billion. The Global Commercial Services division posted an $18 million loss; it generated net income of $110 million during the same period in 2007. Revenues were $1.04 billion, down 7.1% from $1.12 billion. AmEx's Global Network and Merchant Services division reported net income of $215 million, down 15.4% from $254 million, while revenues for the unit were down 9.1%, to $945 million from $1.04 billion. AmEx managed $72 billion in outstanding card loans as of the end of December, down 6.6% compared with $77.1 billion a year earlier. U.S. managed card loans were $62.4 billion, down 5.3% from $65.9 billion. AmEx had 54 million cards in circulation in the U.S. at the end of December compared with 54.3 million a year earlier. Outside the U.S., AmEx had 38.4 million cards in circulation, up 1.6% from 37.8 million. As a company, AmEx reported fourth-quarter net income of $172 million, down 79.3% from $831 million during the same period a year earlier. The company's revenues decreased 11.2%, to $6.5 billion from $7.32 billion.
