American Express Profit Falls -- Update

By Ali Stratton Features Dow Jones Newswires

American Express Co. said Wednesday its second-quarter earnings fell 33% from last year amid heavy competition from large banks and the loss of its 16-year exclusive relationship with Costco Wholesale Corp.

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AmEx posted net income of $1.31 billion, or $1.47 a share, in the quarter, compared with $2 billion, or $2.10 a share, a year earlier. Revenue rose 0.8% to $8.31 billion, growth the company attributed to higher net interest income and higher adjusted card-member spending.

Total expenses rose 20% from last year to $5.8 billion, mostly due to higher rewards expenses related to product enhancements.

Analysts polled by Thomson Reuters expected AmEx to report earnings per share of $1.43 on revenue of $8.2 billion.

Shares of American Express, up 16% year-to-date, fell 1.3% to $84.75 in after-hours trading.

In addition to suffering from the loss of its Costco partnership last year, AmEx has also faced competition by banks such as J.P. Morgan Chase and Citigroup Inc., which have moved to offer more generous travel rewards or cash back.

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Despite those challenges, AmEx won rights to become the exclusive issuer of Hilton Worldwide Holdings Inc. credit cards in June. The deal marked the termination of a long-held arrangement in which AmEx and Citigroup issued the hotel's credit card.

The company on Wednesday also backed its full-year profit outlook at $5.60 to $5.80 a share.

(END) Dow Jones Newswires

July 19, 2017 18:04 ET (22:04 GMT)