American Express (NYSE:AXP)
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By Kimberly Chin
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 19, 2019).
Higher card-member spending and borrowing helped boost revenue at American Express Co., despite higher expenses from its rewards program and loans.
Revenue, net of interest expense, rose 6.6% to $10.36 billion in the first quarter. Analysts surveyed by Refinitiv expected $10.44 billion in revenue for the quarter.
Discount revenue, which reflects the fees charged to merchants for accepting AmEx cards, brought in $6.19 billion for the quarter, a 5.2% increase from a year ago. Analysts expected $6.3 billion from discount fees.
Card-members rewards, the company's largest single expense that includes such things as points redeemed for hotels and airfare, rose 4% to $2.45 billion.
Though card-member loans also grew by 5% for the quarter, the company generated $2.73 billion from interest on loans, up 17% from the year prior. AmEx has been promoting lending to its card-member base in recent years to help boost revenue following the loss of card partnerships, including that with Costco Wholesale Corp. AmEx executives have said they are courting more creditworthy consumers who tend to carry balances on their credit cards rather than pay their bills in full each month.
Partnerships have been key to driving more customers to its network. In the last quarter, AmEx had extended its partnership with Delta Air Lines Inc., its largest cobranded partnership. The company has said the Delta partnership has brought in more than 1 million new accounts over the past two years and has generated significant revenue and earnings to both companies.
AmEx, which has been building its reserves for possible losses, said it had $809 million provision for losses in the quarter, a 4% increase from a year earlier.
Higher operating expenses also drove profit lower in the first quarter from a year earlier. AmEx reported net income in the first quarter was $1.55 billion, or $1.80 a share, down from $1.63 billion, or $1.86 a share, a year earlier. Analysts surveyed by Refinitiv had projected earnings of $2 a share.
Shares of AmEx fell 0.8% to $110.82 in premarket trading.
Write to Kimberly Chin at email@example.com
(END) Dow Jones Newswires
April 19, 2019 02:47 ET (06:47 GMT)
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