American Express on Thursday said its fourth-quarter net income fell 47 percent, as the credit card issuer racked up hefty charges related to restructuring costs and other one-time expenses. But adjusted results beat Wall Street expectations.
The New York-based company had previously alerted investors that its earnings would be taking a hit in the October-December period as a result of booking roughly $594 million in after-tax charges.
The biggest portion of the costs pertains to a restructuring plan that involves cutting some 5,400 jobs, mostly from the company's travel business. The strategy aims to put the company in better position to cater to customers increasingly turning to online and mobile devices to shop, pay bills and make travel plans.
The rest of the charges were related to the company's cardholder rewards program and for reimbursements of interest and fees.
Expenses aside, American Express was buoyed by an 8 percent increase in cardholder spending during the quarter, which coincided with the holiday season, traditionally a period of heighted spending by consumers.
"With higher fourth quarter revenues and card member spending, we ended 2012 in strong shape," Chairman and CEO Kenneth I. Chenault said.
American Express cardholders tend to be more affluent than other credit card users, and the company has done well in the slow, bumpy recovery from the recession.
The company has noted that credit card authorization volume surpassed prior single-day volumes 12 times during the quarter.
American Express reported net income of $637 million, or 56 cents per share, for the three months ended Dec. 31. That compares with net income of $1.2 billion, or $1.01 per share, in the same period last year.
Excluding the after-tax charges, American Express' earnings amounted to $1.09 per share.
Analysts polled by FactSet were expecting adjusted earnings of $1.06 per share.
Revenue for the quarter grew 5 percent to $8.14 billion, in line with analysts' forecast.
Shares ended regular trading up 12 cents at $60.74. The stock slipped 52 cents to $60.22 in after-market trading.
Rival credit card issuer and lender Capital One Financial Corp. also reported fourth-quarter earnings on Thursday.
The McLean, Va.-based company said its net income rose to $825 million, or $1.41 per share. That compares with $381 million, or 88 cents per share, in the same period a year ago.
Revenue jumped 38 percent to $5.62 billion from $4.05 billion.
The results fell short of Wall Street expectations. Analysts polled by FactSet expected earnings of $1.58 per share on revenue of $5.76 billion.
Capital One shares fell $4.35, of 7.1 percent, to $57.24 in extended trading. The stock ended the regular session earlier down 16 cents at $61.59.