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 The world's biggest credit card issuer said an unusually severe
winter caused billed business in the United States to rise 6 percent
in the first quarter, lower than the 9 percent growth in the
preceding quarter.
However, Chief Financial Officer Jeff Campbell said on a
post-earnings conference call that the business had grown through
the second half of the quarter as the weather improved.
U.S. retail sales increased 1.1 percent in March — the biggest gain
since September 2012 — in a sign that the economy is bouncing back
after the severe winter.
"While consumers remain cautious about taking on additional debt, we
continued to see a modest increase in card member loan balances" CEO
Kenneth Chenault said in a statement.
For a graphic on the company's U.S. billed business growth over the
past four years, click (http://link.reuters.com/dyx58v)
American Express, which issues its own cards unlike rivals such as
Visa Inc <V.N> and Mastercard Inc <MA.N>, benefits from its largely
affluent customers' consistent spending and low default rates.
The company's focus on affluent consumers should help drive growth
as such customers in the United States spend 6 times more on their
cards, Janney Capital Markets analyst Sameer Gokhale wrote in a note
in February.
The United States accounts for about two-thirds of American
Express's total billed business.
PROFIT BEATS
The company's net income rose 12 percent to $1.43 billion, or $1.33
per share, for the quarter ended March 31, beating the average
analyst estimate of $1.30 per share, according to Thomson Reuters
I/B/E/S.
Total revenue, net of interest expense, rose 4 percent to $8.20
billion but fell short of Wall Street expectations of $8.36 billion.
Overall spending by the company's card users rose 7 percent,
adjusted for foreign currency, while consolidated expenses fell by 1
percent to $5.5 billion.
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"They (American Express) have been trying to control expenses quite
a bit and the run rate of expenses is below what we've seen in quite
a few quarters," Gokhale said.
American Express in March spun off half of its business travel
division into a joint venture with four financial investors as
companies cut their budgets to protect profit margins.
CFO Campbell said that while the company still expects the deal to
close in the second quarter, delays in getting approvals could push
back this quarter's earnings release.
The company had said it would increase its quarterly dividend by 13
percent to 26 cents per share and buy back up to $4.4 billion of
stock in 2014 after it passed the Federal Reserve's annual stress
test in March.
The company's shares were unchanged at $87.40 in extended trading on
Wednesday. They have risen 35 percent in the past year,
outperforming the Dow's 11 percent gain.
(Reporting by Aman Shah in Bangalore; editing by Sriraj Kalluvila
and Simon Jennings)
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