Amex earns grow 1 percent, beating Wall Street

PALLAVI GOGOI
FILE - In this March 19, 2012 file photo, a sign for American Express is shown in New York. American Express says its second quarter profit rose one percent and beat Wall Street expectations after its well-heeled customers slowed down a little. (AP Photo/Mark Lennihan, File)

NEW YORK (AP) — American Express' well-heeled customers slowed down spending a little in the April-to-June period, leading to growth of one percent in the company's profit.

Investors had feared Amex cardholders would have curtailed their spending even more because of big swings in the stock market during the three-month period.

The credit card issuer earned $1.34 billion, or $1.15 per share, in the April-to-June period. Revenue jumped 5 percent to $8 billion.

Wall Street was expecting a profit of $1.10 per share and revenue of $8 billion.

CEO Kenneth Chenault said spending among the company's consumer, small business and corporate card members "remained healthy despite a very uneven economy."

After adjusting for currency fluctuations, Chenault said Amex card members spent 9 percent more than the same period last year. That was slower than in recent quarters for Amex but still faster than what Amex's competitors were seeing.

Amex's stock was off 56 cents at $57.73 in after-hours trading.

American Express has been doing well after the recession as affluent shoppers spent freely. That's because Amex cardholders are about a third more affluent than other credit cardholders.

Unlike Visa and MasterCard, which only process transactions, American Express issues its own cards. When cardholders charge more on their Amex cards, the company earns even more in interest income and a variety of fees.

However, the slowdown in Europe and Asia seems to have curbed spending among its customers.

Its international revenues fell 4 percent to $1.3 billion. Even after adjusting for the strength of the dollar, revenue in that division rose only 2 percent.

The revenue that Amex collects from other countries fell after being converted back into dollars. Barclays Capital analyst Mark DeVries said in a report to clients that the euro's value against the dollar declined 11 percent, and the British pound declined 3 percent in the quarter.

Growth also slowed in the U.S. Compared to the 35 percent income growth in the first three months of the year, Amex's income in the second quarter rose 8 percent, and revenue grew by 7 percent in the U.S.