American Express is Suspending its Share Buyback Program Due to This

Tax reform has led to American Express deciding to suspend its share buyback program.

The credit card company announced that it has suspended its share buyback program for the first half of 2018 due to a estimated $2.6 billion in upfront charges from the “Tax Cuts and Jobs Act.”

The announcement was made on Thursday by the company as American Express cited additional charges that it has incurred from the new tax reform that was recently signed.

CEO Kenneth Chenault remarked, “The upfront charge triggered by the Tax Act reduced our capital ratios and, as a result, while we will be continuing our quarterly dividends at the current level, we plan to suspend our share buyback program for the first half of 2018 in order to rebuild our capital.”

According to the company, it is estimated the tax rate under President Donald Trump’s “Tax Cuts and Jobs Act” will be around 22 percent before discrete tax items.

Despite the charges, Chenault said, “Overall, we believe the Tax Act will be a positive development for both the U.S. economy and American Express.”

American Express also reported its fourth quarter earnings report beating Wall Street’s expectations.

Disclaimer: We have no position in American Express Company (NYSE: AXP) and have not been compensated for this article.