American Express Profit Boosted by Higher Cardmember Spending

American Express
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Credit card company American Express Co.'s quarterly revenue came in below analyst expectations as cardmember spending growth remained muted.

Cardmember spending in the first quarter increased 7 percent, adjusted for foreign currency translations. This was 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.

However, American Express's billed business was up 6 percent at $224.5 billion and total cards in force crossed 100 million during the quarter.

The company has the lowest delinquency rate among the large credit card companies, including JPMorgan Chase & Co. (JPM), Discover Financial Services, Capital One Financial Corp. (COF), Bank of America Corp. (BAC) and Citigroup Inc. (C).

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 Co. (AXP), which lends directly to consumers and also competes with Visa Inc. (V) and MasterCard Inc. (MA) to process credit card transactions, said global network and merchant services revenue increased 4 percent to $1.3 billion.

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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.

Profit for the quarter ended March 31 rose to $1.28 billion, or $1.15 a share, from $1.26 billion, or $1.07 a share, a year earlier.

Total revenue, net of interest expense, increased 4 percent to $7.88 billion.

Analysts on average had expected earnings of $1.12 a share on revenue of $8.03 billion, according to Thomson Reuters I/B/E/S.

American Express shares were marginally down in trading after the bell. They closed Wednesday at $64.13 on the New York Stock Exchange.