American Express Sees Jump in Card Spending, 3Q Earnings

American Express card customers charged more over the last three months than holders of bank-issued plastic, boosting third-quarter net income for AmEx to $1.2 billion, up 13 percent from $1.1 billion a year ago.
Spending among its card users jumped 16 percent. Shoppers spent an average of $3,739 on their AmEx card in the third quarter.
Total U.S. revenue rose 6 percent to $3.8 billion. Internationally, revenue increased 16 percent to $1.3 billion.
The company’s client base, more affluent than those of the major bank issuers, also defaulted less, apparently feeling less of an impact from the economic slowdown.
AmEx provisions for losses totaled $143 million for its U.S. card services, down 48 percent from $274 million a year ago. The decline reflects continued improvement in defaults and late payments for American Express, the best in the card industry.
“The overall results are showing the benefit of moves we’ve made to improve our risk profile, capture a greater share of cardmember spending, grow fee-based revenues and build additional flexibility into the way we manage expenses,” said Kenneth I. Chenault, chairman and chief executive officer.
American Express rewards programs are popular, but they are also expensive for the company.
Overall expense growth has slowed significantly over recent quarters. Consolidated expenses totaled $5.6 billion, up 13 percent from $5 billion a year ago, reflecting higher rewards costs, which were partially offset by lower marketing and promotion expenses.
See complete third-quarter results for American Express.

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