NEW YORK CITY (dpa-AFX) - American Express (AXP) Tuesday reported a 9 percent jump in second-quarter profit, on higher card spending by customers, lower loan-loss provision and gains related to its business travel division. Results for the quarter were in line with Wall Street estimates.
American Express cards are used mostly by affluent consumers and businesses, helping it perform well even in times of soft economic conditions.
American Express said its card member spending rose 9 percent for the quarter, with volume growth in the US and internationally. This comes amid a rebound in U.S. employment level and improved retail activity.
Commenting on the results, American Express CEO Kenneth Chenault said higher card spending, credit metric at about historic lows, small increase in loan balances, and cost saving measures led to the results.
For the second quarter, New York-based American Express posted net earnings of $1.53 billion or $1.43 per share, compared with $1.41 billion or $1.27 per share last year.
On average, 27 analysts polled by Thomson Reuters projected earnings of $1.38 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the quarter included a gain of $0.05 per share from the closing of the joint venture transaction for the company's business travel operations. In June, American Express sold half of its corporate-travel business to an investor group including Certares LP and Qatar's sovereign wealth fund.
Revenue, net of interest expense, for the second quarter was up 5 percent to $8.66 billion from $8.25 billion in the prior year. Twenty-four analysts had a consensus revenue estimate of $8.66 billion.
U.S. card services revenue climbed 6 percent to $4.5 billion and international card services were up 7 percent to $1.4 billion.
During the quarter, the company's loan-loss provision declined 6 percent from last year to $489 million, further helping the bottomline.
American Express, famed for its credit card and traveler's checks, generates a major part of its revenue from merchants, charging them a discount rate for transactions processed. Revenue also come from cardholders, who pay fees and interest charges on balances.
American Express stock closed Tuesday at $91.71, down $0.15 or 0.16%, on a volume of 4.8 million shares on the NYSE. In after hours, the stock gained $0.17 or 0.19%, to trade at $91.88.
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