American Express Company reports second-quarter net income of $1.4 billion, up 5 percent from $1.3 billion a year ago. Diluted earnings per share was $1.27, up 10 percent from $1.15 a year ago, Amex said.
Second quarter consolidated total revenues net of interest expense rose 4 percent to $8.2 billion, from $8.0 billion a year ago, Amex said. The increase reflected higher cardmember spending and growth in the cardmember loan portfolio, which helped to generate higher net interest income.
Consolidated provisions for losses totaled $593 million, up 29 percent from $461 million a year ago. This increase primarily reflected lower reserve releases this year, partially offset by the benefit of lower net write-offs. Credit indicators continued to be at historically strong levels, Amex said.
Consolidated expenses totaled $5.7 billion, up 1 percent from $5.6 billion last year. The increase reflected higher rewards costs, driven by higher cardmember spending. Expense levels for the quarter reflected, in part, ongoing efforts to contain operating expenses throughout the company.
The effective tax rate was 30 percent, up from 29 percent a year ago, Amex reported. The company's return on average equity (ROE) was 23.6 percent, down from 26.6 percent a year ago.
“We generated record bottom line results this quarter despite an uneven global economy,” said Kenneth I. Chenault, chairman and chief executive officer. “Cardmember spending grew by 7 percent (8 percent adjusted for foreign currency translations), with broad-based gains throughout the business both here in the U.S. and internationally. We continued to build our cardmember loan portfolio while maintaining credit indicators at historically strong levels."
“We are well on track with the restructuring and related initiatives that we announced earlier this year. They are helping us contain expense growth and that, in turn, is giving us the flexibility to make substantial investments designed to grow the business and expand into newer segments of the market, " Chenault said.“We continue to believe that maintaining a lean operating structure will be a critical component of delivering shareholder value in the current environment."