Credit card issuer American Express posted weaker-than-expected, second-quarter results last night as its funding costs rose and it set aside more money for credit losses.
American Express, the third largest credit card network after Visa and MasterCard, posted second quarter profit of $1.057 billion, or 88 cents a share, up from $945 million, or 76 cents a share a year earlier.
Excluding a $65 million tax benefit, American Express earned 83 cents a share, or 3 cents a share below analysts' average estimates, according to Reuters Estimates.
Revenue rose 9 per cent to $7.13 billion. Revenue net of interest expense in the company's international card and global commercial services unit rose 4 per cent to $2.2 billion, reflecting higher spending by corporate and international card holders, as well as higher loan balances.
Net income in that unit rose 22 per cent to $277 million. Total cards in force globally rose 10 per cent to 82.2 million. The company wrote down $473 million of loans to customers, ignoring securitised loans, up from $331 million.
The company's shares declined in after-hours trading as investors brushed off the 12 per cent increase in net income and focused instead on rising write-downs of bad loans.