American Express lifts revenue forecast

American Express Co. raised its revenue forecast for the year, following a second consecutive quarter of strong results on higher card-member spending and loan growth.

On Wednesday, the company said that given its financial performance for the first half of the year, it now expects revenue for the year to increase at least 9%, up from its earlier view of at least 8%. It maintained its view of earnings to be at the high end of $6.90 to $7.30 a share.

Card-member spending rose 10% in the most recent period and the company added 2.9 million cards, Chief Executive Stephen J. Squeri said in a statement.

"We continued our progress towards parity coverage in the U.S., expanded our network internationally and announced new card offerings with three important business partners -- Amazon, Marriott, and Wells Fargo," he said.

Overall, AmEx reported a 21% increase in second-quarter profit to $1.62 billion, or $1.84 a share. Revenue, net of interest expense, rose 9% to $10 billion.

​ Analysts surveyed by Thomson Reuters projected a profit of $1.82 a share on $9.84 billion in revenue.

Shares, which are up 3.7% this year, fell 3.4% to $99.50 in after-hours trading.

The company said last month it would raise quarterly dividend payouts and buy back up to $3.4 billion of common shares through next year's second quarter after clearing the Federal Reserve's annual stress test. The company temporarily stopped buying back its stock after a roughly $2.6 billion charge tied to the U.S. tax overhaul pushed it into its first quarterly loss in a quarter-century.

Ticker Security Last Change Change %
AXP AMERICAN EXPRESS CO. 219.66 +0.24 +0.11%

Wednesday's financial report is the first since the company won a key legal challenge on its policy of preventing retailers from offering customers incentives to pay with cheaper cards.

Historically, AmEx has charged higher fees to merchants than other credit-card companies.

Justice Clarence Thomas, writing for the majority, said AmEx's higher merchant fees "to offer its cardholders a more robust rewards program, which is necessary to maintain cardholder loyalty and encourage the level of spending that makes AmEx valuable to merchants."

Card-members rewards, the company's largest single expense that includes points redeemed for hotels and airfare, reached $2.43 billion in the second quarter, up 11% from the year-ago period.

Overall, expenses rose 7% from the year-ago period.

Meanwhile, discount revenue -- fees charged to merchants for accepting its cards -- remained the company's largest revenue source at $6.19 billion, up 8% from the year earlier.

Spending on AmEx cards rose 10% to $296.5 billion globally, while card-member loans rose 14% to $75.4 billion.