AmEx 3Q Profit Jumps 71% on Higher Business Spending
Oct 21st 2010 5:24PM
Updated Oct 21st 2010 7:27PM
American Express Co.'s (AXP) third-quarter profit surged 71% as the No. 3 U.S. processor of credit-card sales appeared to benefit from a rebound in consumer and business spending as well as demand for the company's travel services.
Net income was $1.09 billion, or 90 cents a share, up from $640 million, or 54 cents, a year earlier, AMEX said in a statement Thursday. Net revenue after interest expenses increased 17% to $7.03 billion.
Amex cardmembers boosted spending by 14%, reflecting a rebound for corporate-card holders, the company said today. Such increases offset the effect of lower interest revenue as consumers have paid down outstanding balances.
"While we remain cautious about the economic outlook, we plan to capitalize on that advantage by investing to strengthen relationships with high-spending cardmembers and the merchants who accept our products," said AMEX CEO Kenneth I. Chenault in the statement.
The company was expected to earn 85 cents a share on $6.79 billion in sales, according to Thomson Reuters survey of analysts.
AMEX earlier this month was sued by the U.S. Justice Department, which alleged that the financial institution engaged in anticompetitive practices. The Justice Department also said it reached a proposed settlement with Visa (V) and MasterCard Inc. (MA) over similar charges.
AMEX said at the time that it had no intention to settle the lawsuit.