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American Express to cut more than 4,000 jobs this year after unit sale

American Express Co., the biggest U.S. credit-card issuer by purchases, will cut more than 4,000 jobs companywide this year as it seeks to curtail expenses.

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American Express Co., the biggest U.S. credit-card issuer by purchases, will cut more than 4,000 jobs companywide this year as it seeks to curtail expenses.

AmEx took a $206 million charge in the fourth quarter to “improve operating efficiencies,” the New York-based firm said Wednesday in a statement as it reported results for the period. Marina Norville, a spokeswoman, declined to say which positions are being eliminated. AmEx had 62,800 employees at the end of 2013, which she said were the most recent figures available.

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The lender, led by Chief Executive Officer Kenneth I. Chenault, agreed last year to sell digital travel firm Concur Technologies Inc. to SAP SE, resulting in a $719 million gain. The company said it used a substantial portion of that gain to fund the charge.

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Fourth-quarter profit climbed 11 percent to $1.45 billion, or $1.39 a share, from a year earlier as customer card spending increased, AmEx said. The average estimate of 28 analysts surveyed by Bloomberg was $1.38 a share.

Headcount won’t decline by 4,000 because new jobs will be created elsewhere in the company, Chief Financial Officer Jeff Campbell said on a conference call. The job cuts are part of an effort to improve efficiency as technology transforms the payments industry, he said.

Revenue Rises

Chenault, 63, is relying on an increase in lending and accelerated customer spending to boost revenue. AmEx is seeking to expand its reach beyond affluent customers by increasing its prepaid debit business, while adding credit cards geared toward everyday spending and lowering some merchant fees.

Fourth-quarter revenue rose 6.6 percent to $9.12 billion from a year earlier as customer spending climbed to $268.5 billion, the company said. AmEx set aside $399 million to cover losses, a 25 percent increase.

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“Revenue growth in particular is expected to remain challenging,” Jason Arnold, an RBC Capital Markets analyst, said before results were released. “Expense controls may position the company behind the curve as other large card players target consumers at the upper end.”

AmEx said Wednesday that it extended a co-brand partnership with Starwood Hotels & Resorts Worldwide Inc. The credit-card company is under pressure to retain arrangements with firms including Costco Wholesale Corp. and JetBlue Airways Corp. after reports the firms have considered ending partnerships.

Delta Air

The bank renewed an agreement last month with Delta Air Lines Inc., its largest airline partner. AmEx said on Wednesday that the renewal cost $109 million in the fourth quarter on new contract terms for rewards and the removal of a previously announced cap on point transfers.

“The competitive environment has become more intense” for co-brand deals, Campbell said. AmEx is disciplined in choosing partners and is “focused on the relationships that can offer the best value, the best growth potential and the best returns.”

Discover Financial Services said Wednesday that fourth- quarter profit fell 33 percent to $404 million, or 87 cents a share, from $602 million, or $1.23, a year earlier, as revenue excluding interest expense declined 4.3 percent to $2.04 billion. Profit excluding some items was $1.19 a share, missing the $1.30 average estimate of 17 analysts surveyed by Bloomberg.

American Express slid 2.3 percent to $85.66 at 4:51 p.m. in extended trading in New York. The shares dropped 5.8 percent this year through the close of regular trading. Discover fell 3.7 percent to $58.60 at 5:05 p.m.

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