American Express (AXP) revealed stronger-than-expected second-quarter earnings late Wednesday as cardmember spending improved and cost-cutting initiatives began to pay off.

The New York-based financial services company, which said earlier Wednesday it is working with European regulators as they ready to introduce new caps on swipe fees, reported net income of $1.4 billion, or $1.27 a share, up about 5% from $1.34 billion, or $1.15, a year ago.

Analysts in a Thomson Reuters poll had been calling for earnings per share of $1.22.

Revenue for the three-month period grew 4% to $8.24 billion, marginally below the Street’s view of $8.28 billion. The gain was a reflection of a 7% increase in cardmember spending and growth in loan portfolio that helped to generate higher net interest income.

However, AmEx said its return on average equity was 23.6%, down from 26.6% a year ago, and its loan loss provision, or the expense it set aside to allow for bad loans, increased by 29% to $593 million.

“We generated record bottom line results this quarter despite an uneven global economy," AmEx CEO Ken Chenault said in a statement. "We continued to build our cardmember loan portfolio while maintaining credit indicators at historically strong levels.”

The company, he said, is “on track” with its restructuring, which was announced earlier this year and included axing 5,400 jobs. The benefits, he added, have so far helped the company contain expenses, in turn giving it the financial flexibility to invest into newer markets.

Shares of the blue-chip card operator spilled narrowly into the red after hours, trading around $76.38 after closing down 1.9% to $76.80 in regular trade.

The company’s shares took a hit earlier on Wednesday when reports emerged that regulators in Europe are considering adding swipe fees.

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