Increased consumer spending helped boost second quarter earnings for credit card giant American Express (AXP) Thursday, which reported a $1 billion profit, nearly tripling the $337 million it reported for the a year ago quarter.
The credit card issuer reported total revenues of $6.86 billion, which was on target with Wall Street's expectations. Earnings, however, surged past analysts expectations, coming in at 84 cents a share -- 6 cents per share higher than Wall Street projected and significantly higher than the 9 cents a share it reported in the year-ago quarter.
"Cardmember spending rose 16 percent and improved credit indicators continued the year-long trend that began last spring," said Kenneth I. Chenault, chairman and chief executive officer in a statement. "Spending rose across all segments with the largest increases coming from corporate cards, cards issued by our bank partners, charge cards and premium co-brand products where many cardmembers tend to pay in full each month."
Chenault said that while the economy remains volatile and uncertain, the company's net income and billed business has return to pre-recession levels. Nevertheless, the executive said he remains cautious about the economy, as well as the "challenging regulatory environment."
Yet, unlike other credit card companies, AmEx will not be impacted by the consumer protection act signed into law Wednesday by President Obama. The law puts caps on debit cards and fees.
AmEx, which had the best performance in 2009 among the Dow Jones Industrial Average's 30 stocks, closed at $43.19, up 5% or $2.04 a share.
Increased Spending Helps AmEx Nearly Triple Quarterly Earnings to $1 Billion