American Express 3rd-qtr profit rises 13 percent
NEW YORK (AP) — American Express Co. on Wednesday said that its third-quarter profit rose 13 percent, as its customers spent more on their cards.
For the three months ended Sept. 30, the credit card company posted net income attributable to common shareholders of $1.24 billion, or $1.03 per share, compared with $1.09 billion, or 90 cents per share, in the year-ago period.
Revenue rose 9 percent to $7.57 billion from $6.97 billion last year.
Analysts, on average, were expecting profit of 95 cents per share, on revenue of $7.58 billion, according to data provided by FactSet.
New York-based American Express, which has an affluent customer base that is less affected by the struggling economy, said card user spending rose 16 percent.
The average spending per card during the quarter was $3,739.
In the U.S., total revenue rose 6 percent to $3.8 billion. Internationally, revenue leaped 16 percent to $1.3 billion.
Meanwhile, the company enjoyed the lowest rate of late payments and defaults on balances in the industry, reflecting both the wealth of its customers and Amex's strict management of problem accounts. The drop in delinquency and default over the past year allowed Amex to reduce the amount it set aside to cover unpaid bills during the quarter by 33 percent, to $249 million.
The increased use of American Express cards reflects a trend across the credit card industry, as consumers seek ways to maximize their spending by taking advantage of rewards programs. Amex's rich rewards program makes it appealing, especially since most of its customers also carry cards with other brands.
Partly because of increased rewards redemptions, Amex said its expenses rose 13 percent to $5.6 billion. The company cut its marketing and promotion costs to offset some of the 24 percent jump in rewards costs. Rising expenses is an issue some analysts have raised as a concern.
Chairman and CEO Kenneth Chenault said growth in expenses is expected to further slow through the rest of this year and into 2012.
American Express shares closed Wednesday trading down 55 cents at $46.13. Shares shed another 33 cents to $45.80 in aftermarket trading.