American Express Earnings Beat; Revenue Falls Short
American Express reported first-quarter earnings that beat analysts' expectations on Wednesday but revenue was light as cardmember spending growth remained muted for the fourth time in a row.
After the earnings announcement, the company's shares slipped in after-hours trading. What is American Express stock doing now? (Click here for the latest after-hours quote.)
Net income rose 2 percent to $1.28 billion, or $1.15 a share, from $1.26 billion, or $1.07 a share a year earlier.
Revenue increased nearly 4 percent to $7.88 billion from $7.61 billion a year ago.
Analysts had expected the financial-services company to report earnings of $1.12 a share on $8.03 billion in revenue, according to a consensus estimate from Thomson Reuters.
"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," CEO Kenneth I. Chenault said in a statement.
Cardmember spending at the company, which focuses on affluent customers, increased 7 percent, adjusted for foreign currency translations, the fourth successive quarter of single-digit growth after nine quarters of double-digit growth.
Expense accounts have come under greater scrutiny as companies look to cut costs to protect profit margins, hurting the credit card lender, which gets more than a quarter of its U.S. billed business from affluent corporate customers.
It set aside $497 million to cover future bad loans in the quarter, 21 percent more than it had provisioned last year, reflecting its larger lending portfolio.
American Express, which lends directly to consumers and also competes with Visa and MasterCard to process credit card transactions, said global network and merchant services revenue increased 4 percent to $1.3 billion.
Consolidated expenses during the quarter remained in check, rising marginally, as the company looks to control costs and maintain a leaner operating structure.
The company said in January it would cut about 5,400 jobs as part of a global restructuring and took a related $600 million charge.
The company said it plans to boost its dividend next quarter and buy back shares this year.