American Express Profit Tops Street On Higher Card Spend, Lower Loss Provision

(RTTNews) - American Express Co (AXP) on Thursday said its first-quarter profit increased more than 6 percent from a year ago, driven by higher card-member spending and lower loan-loss provisions, even as a strong dollar dented international revenues. While its quarterly earnings topped Wall Street estimates, revenues fell short of expectations.

Shares of the company were losing $0.91 or 1.12% in after-hours trade on the NYSE.

American Express said its card member spending increased 3 percent globally in the quarter, or 7 percent adjusting for currency impacts.

CEO Kenneth Chenault said the company also benefited from a modest increase in loans, credit metrics near historic lows and cost controls.

On the flip-side, there was the impact from a stronger dollar, an uneven global economy, and the long-term renewal of several cobrand relationships that provide it with lower initial economics, Chenault said.

In February, American Express said it would not renew its exclusive U.S. co-branding and merchant acceptance agreements with membership warehouses operator Costco Wholesale Corp (COST) set to expire next March. Costco had ended its exclusivity deal with Amex in Canada last year.

American Express, based in New York, reported first-quarter net earnings of $1.51 billion or $1.48 per share, compared with $1.42 billion or $1.33 per share last year. On average, 28 analysts polled by Thomson Reuters estimated earnings of $1.37 per share for the quarter. Analysts' estimates typically exclude special items.

Net of interest expense, revenues for the first quarter declined 3 percent to $7.95 billion from $8.17 billion in the prior year. Nineteen analysts had a consensus revenue estimate of $8.21 billion for the quarter.

Revenue from U.S. card services segment rose 6 percent, driven by a 7 percent rise in card member spending and higher net interest income.

International card services revenue fell 8 percent, hurt by a stronger dollar. Revenue at its global commercial services segment slid 31 percent from last year, when results included its business travel operations. Global network and merchant services revenue fell 2 percent.

American Express said its loan-loss provisions declined 13 percent from a year ago to $420 million, reflecting a larger reserve release for the latest quarter. The company said credit indicators continued to be at historically strong levels.

American Express continues to expect full year 2015 earnings to be flat to modestly down year-over-year.

In January, American Express announced 4,000 job cuts in 2015, in its efforts to curb expenses.

AXP closed Thursday at $80.91, up $1.16 or 1.45%, on a volume of 6.6 million shares on the NYSE. In after hours, the stock dropped $0.91 or 1.12% at 80.00. In the past year, the stock has trended in the range of $77.12 - $96.24.