AmEx Earnings Hits Target, but Revenue Is a Slight Miss

AmEx Earnings Hits Target, but Revenue Is a Slight Miss
Karen Bleier | AFP | Getty Images

American Express reported quarterly earnings that were in-line with Wall Street's forecasts, but revenue came in just shy of estimates as cardmember-spending growth remained muted for the second quarter in a row.

The company reported its earnings rose 1 percent to $1.25 billion, or $1.09 a share, in the third quarter from $1.24 billion, or $1.03 per share, in the year-earlier period.

Revenue grew at its slowest rate in 11 quarters, increasing 4 percent to $7.86 billion from $7.57 billion a year ago. The rise was driven in part by an 8 percent rise in cardmember spending in the U.S. and 6 percent globally.

That 8 percent jump, however, was still below the double-digit growth the company had posted for the nine preceding quarters, a reflection that the company's American cardholders, mostly affluent consumers, have reined in their spending.

"It represents slower growth than we were generating earlier in the year, a trend that we are seeing among major card issuers, " Chief Executive Kenneth Chenault said in a statement.

Analysts had expected American Express to post earnings of $1.09 a share on $7.90 billion in revenue, according to a consensus estimate from Thomson Reuters.

The company has the lowest delinquency rate among the large credit-card companies, including JPMorgan Chase, Discover Financial Services, Capital One Financial, Bank of America, and Citigroup .

But it set aside $479 million to cover future bad loans, reflecting its larger lending portfolio, 92 percent more than it provisioned last year.

"We didn't have the same benefit from substantial reserve releases as last year when write-offs and delinquencies were declining at a faster rate, " Chenault said.

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 grew 5 percent to $1.3 billion.