AmEx posts $1.2 billion loss under new tax law

Credit card company American Express posted a $1.2 billion loss in its latest quarter after booking large one-time charges related to the new tax law. The company also announced it would suspend its share buy-back program for six months to rebuild its capital following the charge.

American Express Co. said Thursday it lost $1.41 a share in the three months that ended Dec. 31, compared with a profit of $825 million, or 88 cents per share, in the same period a year earlier.

Excluding the one-time charges, AmEx said it earned $1.58 a share. Industry analysts had expected $1.54 a share on average, according to FactSet.

Like other banks, American Express had to take significant one-time charges against its results to comply with the new tax law that was enacted in December. The company had $2.6 billion in charges, mostly tied to profits American Express had earned abroad and was now returning to the U.S. under a special one-time tax program. The company also had some deferred tax assets, or credits it could have used toward future tax bills, which it had to write down.

New York-based American Express now expects its corporate tax rate to be around 22 percent, down from the roughly 30 percent the company historically paid. American Express executives said they plan to distribute part of the extra income from the tax savings into employee profit-sharing programs; part into new initiatives, programs or promotions for customers; and part to shareholders in the form of higher dividends and buybacks in future years.

This is the last full quarter with Kenneth Chenault, American Express’ CEO and chairman, at the helm of the company. Chenault announced last year he would retire effective Jan. 31. He had been CEO since early 2001.