American Express Co. on Thursday reported a $2 billion profit for the fourth quarter of 2018, representing a significant turnaround from a $1.2 billion loss in the final quarter of 2017.
Last year, the New York City-based card giant took a $2.6 billion charge in the fourth quarter that was related to the federal Tax Cuts and Jobs Act. For this year’s fourth quarter, AmEx said it was able to log $496 million in “certain discrete tax benefits.”
AmEx also reported a rise in discount fee revenue despite a slight slide in its average discount rate. The discount rate for 2018 was 2.37%, down three ticks from 2.40% the prior year and continuing a slow trend toward lower rates. The average rate for the fourth quarter was 2.36%, down one basis point from the same period in 2017.
The company attributes the slight drop to “rate reductions related to merchant negotiations, the continued growth of the Opt Blue program, and changes in industry and geographic mix.” Opt Blue is a program that enables independent sales organizations and other third-party payments providers to sell AmEx acceptance to merchants alongside Visa, Mastercard, and other payment brands. Early last year, AmEx indicated it intended to cut back its discount rates to build more merchant business.
Despite the slight fall in the rate, total discount revenue for the year came to $24.7 billion, up 8% over 2017.
Billed card volume in the United States totaled $205.1 billion in the fourth quarter, up 9% year-over-year. For all of 2018, the total was $777.6 billion, a 10% increase over 2017. U.S. cards in force came to 53.7 million for the quarter, a 7% increase year-over-year.
Net income for the fourth quarter totaled $2.01 billion on revenue net of interest expense of $10.47 billion, up 8% from 2017. Revenue for the year totaled $40.3 billion, up 9%.