(Reuters) - American Express Co AXP.N said it expects to report a fourth-quarter loss due to a $2.4 billion hit from the tax legislation which makes it cheaper for U.S. companies to repatriate profits.
The company also said it expects full-year 2017 earnings to be below its $5.80-$5.90 per share forecast. (bit.ly/2CyIWfT)
The impacts of the tax act in the fourth quarter will reduce American Express’ regulatory capital and capital ratios for the fourth quarter, the company said.
In the long run, AmEx expects the lower corporate tax rate to be a significant benefit. The company anticipates effective tax rate in the low twenties before discrete tax items in 2018.
Congress’ U.S. tax overhaul bill, which President Donald Trump signed into law last month, significantly cuts the corporate tax rate to 21 percent from 35 percent.
According to the new law, profits brought back to the United States would not be taxed at the full 35-percent corporate tax rate that would normally be due. Instead, those profits would be taxed at only 15.5 percent for cash assets and 8 percent for illiquid assets.
Goldman Sachs Group Inc GS.N said last week it also expects fourth-quarter earnings to decrease by about $5 billion due to the tax legislation.
Reporting by Nikhil Subba in Bengaluru; Editing by Shounak Dasgupta
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