By Daniel Huang And Tess Stynes
American Express Co.'s first-quarter net income rose 6.5%, as
cardholders increased spending and borrowing.
The earnings, released after the end of regular trading on
Thursday, exceeded analysts' estimates. But AmEx's shares fell 1.4%
in after-hours trading, as the company said results were hurt by
the strong U.S. dollar, which reduced revenue booked in other
countries.
The New York-based company, run by Chairman and Chief Executive
Kenneth Chenault, was dealt several setbacks during the quarter,
including the loss of a court case and a lucrative 16-year
partnership with Costco Wholesale Corp.
American Express reported a profit of $1.53 billion, or $1.48 a
share, compared with $1.43 billion, or $1.33 a share, a year
earlier.
Revenue, net of interest expense, dropped 2.7%, to $7.95
billion. It rose 1% excluding the impact of currency conversions
and 5% when also excluding the business-travel operations that were
part of the company a year ago.
Card member spending increased 3%, or 7% excluding currency
adjustments.
Card member loans rose to $66.8 billion in the quarter, up 4%
from a year earlier. Provisions for losses totaled $420 million,
down 13% from a year earlier. American Express said credit
indicators continued to be at historically strong levels.
In a statement, Mr. Chenault reiterated the company's forecast
that 2015 earnings will be "flat to modestly down year over year."
AmEx is also feeling the impact from ending its relationship with
Costco Canada at the end of last year, he said.
The company's U.S. card-service business reported that its
earnings increased 7%, to $934 million, while revenue increased 6%,
to $4.5 billion.
Struggling in recent months to keep up with its longtime
revenue-growth target of 8%, the card company had instead
prioritized cost-cutting, including announcing in January the
elimination of 4,000 jobs throughout the year.
Expenses in the most recent quarter fell 4.9%, to $5.21
billion.
The company will continue to focus on controlling expenses as
its relationship with Costco in the U.S. winds down this year, said
Chief Financial Officer Jeffrey Campbell on a conference call with
analysts. Mr. Campbell said growth opportunities will include
servicing more small businesses and continuing to invest in
international markets.
Mr. Campbell said it was "tough to see" people spending more
given their increased savings from lower gas prices.
Write to Daniel Huang at daniel.huang3@wsj.com and Tess Stynes
at tess.stynes@wsj.com
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