American Express Raises Earnings Outlook
October 19 2016 - 4:17PM
Dow Jones News
By Anne Steele
American Express Co. boosted its earnings guidance for the year
as the credit card company reported stronger-than-expected earnings
and revenue for the third quarter, driven by a rise in card member
spending and net card fees.
Shares added 4.7% after hours to $64.15.
"Strong operating discipline and credit quality helped to keep
us ahead" of the company's initial outlook, said Chief Executive
Kenneth Chenault, adding loan growth remained healthy and net card
fees rose 10%, reflecting strong performance across premium card
portfolios.
The company now expects earnings, excluding restructuring
charges, of $5.90 to $6 a share, up from its prior estimate for
$5.40 to $5.70.
American Express has suffered from issues ranging from the loss
of its 16-year exclusive relationship with warehouse-club retailer
Costco Wholesale Corp., to heavy competition, to declines in
corporate travel budgets.
The company, which earlier this year said it would cut $1
billion in costs, said its third-quarter expenses declined 3%.
In all, American Express reported a profit of $1.14 billion, or
$1.20 a share, down from $1.27 billion, or $1.24 a share, a year
earlier. Excluding restructuring charges, earnings were flat at
$1.24 a share, beating analyst estimates for 97 cents a share,
according to Thomson Reuters.
Revenue fell 5.1% to $7.78 billion. The top line increased 5%,
however, excluding the impact of Costco-related revenue in the year
earlier-period, reflecting a rise in card member spending, along
with higher net interest income and net card fees.
Revenue growth at American Express has been in focus lately
because it has fallen short of internal growth targets. Analysts
were looking for $7.72 billion.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
October 19, 2016 17:02 ET (21:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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