NEW YORK CITY (dpa-AFX) - American Express Company (AXP), Wednesday reported a 31 percent rise in second-quarter profit, primarily due to a significant reduction in provisions for losses. Revenues grew 12 percent, with cardmember spending improving 18 percent, but were outpaced by expenses as the company made investments in creating a digital closed loop.
For the second quarter, American Express' net income attributable to common shareholders rose to $1.316 billion or $1.10 per share from $1.004 billion or $0.84 per share in the year-ago period.
On average, 17 analysts polled by Thomson Reuters expected earnings of $0.98 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the quarter included $36 million of net income from discontinued operations.
Total revenues for the quarter, net of interest expense, grew 12 percent to $7.618 billion from $6.805 billion in the year-ago quarter. Seventeen Street analysts had a consensus revenue estimate of $7.35 billion for the quarter.
Consolidated provisions for losses totaled $357 million, down from $652 million in the year-ago period reflecting continued improvement in credit quality.
Consolidated expenses for the quarter increased 21 percent to $5.5 billion from $4.6 billion a year ago, reflecting the cumulative impact of rewards program enhancements and business building initiatives.
U.S. Card Services revenues net of interest expense increased 4 percent to $3.759 billion, and net income rose 29 percent to $665 million, with a 56 percent drop in provisions for losses.
International Card Services revenues net of interest expense increased 22 percent to $1.351 billion, and net income rose 4 percent to $161 million, with expenses increasing 30 percent. The provisions for losses were down 13 percent for the quarter.
Global Commercial Services revenues net of interest expense increased 16 percent to $1.191 billion, and net income rose 58 percent to $177 million. The provisions for losses increased 25 percent to $35 million from $28 million a year ago, primarily reflecting higher receivable balances.
Global Network & Merchant Services revenues net of interest expense increased 18 percent to $1.239 billion, and net income rose 24 percent to $324 million.
Seeking to position itself to take on transformation of the payments industry, American Express has built a location-based marketplace with Foursquare and upgraded its digital payments platform, Serve. The company has expanded its relationship with Facebook to deliver coupon-less offers, and has created a digital marketing tool that helps merchants build their business with customized offers on Facebook.
AXP closed Wednesday's regular trading at $52.09, up $0.28 or 0.54%, on the NYSE. In after-hours, the stock is gaining $0.13 or 0.25%.
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