American Express Company’s (NYSE:AXP) revenue and earnings per share (EPS) rose during the third quarter of the current fiscal year, as the company reported a decline in consolidated expenses of $5.5 billion, 2 percent lower than its $5.6 billion expenses during the same quarter a year ago.
According to the financial statement of American Express, its third quarter net income was $1.3 billion, a 1 percent increase from its previous net income last year. The company posted an EPS of $1.09, percent higher than the $1.03 EPS during the same period in 2011.
The total revenue of the company was $7.9 billion, a 4 percent growth from its $7.6 billion total revenue a year earlier. The result was driven by an increase in card member spending and higher net interest income.
In a statement, Kennet I. Chenault, chairman and chief executive Officer of American Express Company (NYSE:AXP), said, “We generated solid results this quarter, against the backdrop of a very uneven global economy. Bottom line results were driven by higher revenues and lower expenses, a combination that reflects ongoing efforts to contain operating costs, while maintaining a substantial level of investment in our marketing and rewards programs.”
According to Chenault, the card member spending climbed by 6 percent worldwide, and 8 percent in the United States. He said, the improvement rate in card member spending is healthy under the current environment. However, he said, “It represents slower growth than we were generating earlier in the year, a trend that we’re seeing among major card issuers.”
“Credit quality remained at the historically strong levels, but we didn’t have the same benefit from substantial reserve releases as last year, when write-offs and delinquencies were declining at a faster rate,” added Chenault.
The company’s U.S. Card Services segment reported $699 million net income, 5 percent lower from its $733 million net income in 2011. The segment’s total revenue, net of interest expense, was $4.1 billion, up by 6 percent, and posted $339 million provisions for losses.
The International Card Services segment reported a 26 percent decline in net income from $221 million last year, to $164 million in the third quarter this year. The total revenues, net of interest losses, dropped by 3 percent to $1.3 billion. The segment’s provision for losses $83 million, 18 percent lower than the $101 million recorded last year.
The company’s Global Commercial Services segment also reported a decline in net income. The segment posted $183 million net income in the third quarter this year compared with the $197 million net income a year earlier. The total revenues net of interest expense were $1.2 billion, a 2 percent increase.
Meanwhile, the company’s Global Network and Merchant Services segment reported $360 million net income, an increase of 8 percent from its net income of $332 million during the same period in 2011. The segment reported $1.3 billion total revenues net of interest expense, up by 5 percent.
According to Renault, American Express Company (NYSE:AXP) is strengthening is traditional products that provide value to card members and drive business for merchants, expanding its franchise and extending its Loyalty Partner business in new markets, such as Mexico.
The company previously announced its partnership with Wal-Mart Stores, Inc. (NYSE:WMT) in providing alternative debit cards and checking accounts. Chenault said, “We continue to see many growth opportunities as new technologies drive the migration of global payments from cash and checks towards plastic and digital transactions.”