Credit card giant American Express Co. (AXP) said Wednesday first-quarter earnings jumped 33% from a year ago, largely on increased spending by its cardmembers.
AmEx reported first-quarter net income of $1.2 billion, compared with $885 million during the same period a year ago. Earnings per share came in at 97 cents, versus 73 cents a year ago. Analysts were looking for earnings of 93 cents a share.
In addition to the increase in spending by its members, AmEx said the stronger numbers resulted from higher travel commissions and fees, numbers that were partially offset by lower interest income due to a lower yield on its loan portfolio.
Consolidated provisions for losses were much lower at $97 million in the first quarter of 2011 compared with a year earlier when they totaled $943 million. AmEx said it was a reflection of continued improvement in the credit quality of its cardmembers.
AmEx said its consolidated expenses rose 19% to $5.2 billion, up from $4.4 billion a year ago on “significant investments in business building initiatives, as well as higher rewards costs.”
“Record earnings this quarter reflect credit quality and billed business trends that are among the best we’ve seen. Cardmember spending was up 17%, with broad-based strength across all our businesses segments,” Kenneth Chenault, AmEx’s chairman and chief executive officer, said in a statement.
AmEx shares closed up by less than 1% on Wednesday, at $47, and fell slightly in after-hours trading.