The corporate payment card division of American Express reported $3.5 billion in fourth-quarter revenue net of interest expenses, up 7 percent over the final quarter of 2018, Amex reported today. The payment giant's Global Commercial Services business unit has seen consistent and similarly sized increases in net revenue for the past several quarters.
Fourth-quarter card-billed business for the GCS unit was $133 billion, up 5 percent from $126.9 billion the previous year. Proprietary cards in force tallied 14.9 million, a 3 percent advance from 14.5 million cards in Q4 2018. Average quarterly cardholder spend was $8,956, up 2 percent from $8,757.
Among client segments, small and midsize enterprises continued to serve as strong growth areas for GCS. U.S. SME billings rose 6 percent year over year in the fourth quarter, while international SME remained GCS's fastest-growing segment, with billings up 15 percent adjusted for foreign currency. Large and global corporate segment billings, however, edged down 1 percent year over year on a foreign currency-adjusted basis—in line with an identical 1 percent decline reported in the previous quarter.
Overall, net fourth-quarter income for GCS inched down 1 percent year over year to $617 million, from $624 million one year earlier. The downtick was driven largely by a 9 percent year-over-year increase in total segment expenses, which rose to $2.6 billion, from $2.4 billion a year previous. Amex said the increased costs reflected growth in rewards and other customer engagement costs—including incentives stemming from increased cardholder spending—as well as higher operating expenses.
American Express chairman and CEO Steve Squeri during a Friday earnings call touted the company's recent overhaul of its corporate card line, which included adding travel-related rewards and opening the products to startups typically considered too small for corporate programs but too large for small business programs.
While still early days for the revamp, Squeri said the refresh helped push "greater customer engagement and strong new card acquisitions which are driving our revenue growth."
Airline-related spend across Amex's entire business line ramped up 1 percent year over year, adjusted for foreign currency, while U.S. T&E-related billings rose 6 percent, the company reported.
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