Sign up USA
Proactive Investors - Run By Investors For Investors

American Express Q1 profits top views on rise in consumer spending

American Express Q1 profits top views on rise in consumer spending


Shares of American Express Co. (NYSE:AXP) edged higher Thursday, after the company reported first quarter profits that topped analyst expectations as cardholder spending rose seven per cent.

For the three months ended March 31, American Express reported net income of $1.28 billion or $1.15 per diluted share, compared to net income of $1.25 billion or $1.07 per diluted share a year earlier.

Revenue rose four per cent to $7.88 billion from $7.58 billion.

Analysts polled by Thomson Reuters were expecting per share earnings of $1.12 on revenue of $8.03 billion.

“We are off to a strong start in 2013, thanks to our ability to grow revenue in a slow growth economy, control expenses and maintain a strong balance sheet,” said chairman and CEO Kenneth I. Chenault. 

“Card member spending grew six per cent - seven per cent adjusted for foreign currency translations - and we saw a modest increase in loans outstanding. Revenue from annual card member fees was also up from a year ago, reflecting the value our customers see in their relationship with American Express.”

Total provisions for losses totaled $497 million, up 21 per cent from $412 million a year ago. The company said the increase was a result of a larger lending reserve release a year ago, partially offset by lower net write-offs in the current quarter. Credit indicators continued to be at “historically strong” levels, it added.

The company's return on average equity (ROE) was 23.2 per cent, down from 27.1 per cent a year ago.

By segment, American Express said its U.S. card services unit saw net income rise seven per cent, while revenues increased five per cent, driven by a rise in card member spending and higher net interest income.

Income in the international card services segment dropped 10 per cent, while revenues added one per cent due to higher card member spending and growth in annual card member fees. 

The company’s global commercial services unit reported an eight-per-cent rise in net income and revenues that grew by one per cent on more spending by corporate card members, partially offset by lower travel commissions and fees.

Meanwhile, the global network and merchant services unit posted a four-per-cent rise in net income and revenue, reflecting higher merchant-related sales driven by global card member spending, as well as an increase in revenues from the company’s bank partners. 

“Capital strength is also a critical advantage in uncertain times, and the advantages of our spend-centric business model were again underscored by results of the Federal Reserve’s annual stress test,” said Chenault.  “Our performance was among the best in the hypothetical severe stress scenario and as a result, we plan to increase our dividend to 23 cents per share next quarter, a 15-per-cent increase for shareholders.”

American Express said it is also moving ahead with plans to buy back common shares that would return up to $3.2 billion to shareholders during the remainder of 2013 and up to an additional $1.0 billion in the first quarter of 2014.

Shares of the company were up 0.19 per cent just ahead of market open, trading at $64.25.


View full AXP profile View Profile

American Express Company Timeline

Related Articles

Russia picture
June 04 2018
The bulk of overall exposure is in credit and government bonds followed closely by equities
different currencies
January 11 2018
The decision to complement its retail offering with a corporate service is quite literally paying off
wedding bands in gold
September 06 2017
Coinsilium's Terrastream platform could reshape the landscape of junior mining funding

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright ©, 2018. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use