American Express Results Top Forecasts; Costs Jump
Special to CNBC.com
American Express reported results Wednesday that exceeded analysts' expectations, but shares of the company came under pressure as investors panned a double-digit increase in expenses.
The credit card company said it earned $1.18 billion, or 97 cents a share, in the first quarter. This came against $885 million, or 73 cents a share, earned in the same period last year.
Revenue was reported at $7.03 billion, up from $6.60 billion a year ago.
Equity analysts who follow American Express, a Dow component, had expected earnings of 93 cents a share on sales of $6.98 billion, according to a survey conducted by Thomson Reuters.
Cardmember spending rose 17 percent. In a release, American Express chief executive officer Kenneth I. Chenault said the company's earnings "reflect credit quality and business trends that are among the best we've seen."
In the company's U.S. business, net income rose 34 percent to $555 million, up from $414 million a year before. Provisions for losses in the U.S. segment were sharply lower, falling to $47 million from $687 million last year.
Expenses in the U.S. group, however, jumped 21 percent as the company spent more on marketing and rewards programs. In American Express's international card business—where net income rose 36 percent to $189 million—total expenses also increased.
Expenses across the company totaled $5.2 billion, up 19 percent from a year before.
Earlier this month, the company reported that its charge-offs fell to 3.7 percent in March, from 4.4 percent in February, putting the company ahead of its peers in losses on uncollectible credit card balances.
Shares of American Express, which closed at $47.00 in regular Wednesday trade, were last 1 percent lower in extended trading. Get real-time quotes for American Express here.