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American Express posted a slimmer-than-expected fall in first quarter profits and revenues, as higher cardholder spending and interest income dulled some of the impact of the loss of its co-branding relationship with Costco.

Revenues slipped 2 per cent year-on-year to $7.9bn. Net income fell to $1.2bn, or $1.34 a share, from $1.4bn, or $1.45 a share. Analysts had forecast EPS of $1.27 on revenues of $7.79bn.

The shares of the Dow component zipped 3.2 per cent higher in after-hours trading.

AmEx completed the sale of its Costco card portfolio to Citigroup last June, putting an end to a once-lucrative partnership for the New York based company.

However, in the first quarter of 2017, AmEx’s results were boosted by higher member spending that came as consumer confidence perked up since the first quarter of last year, particularly among wealthier individuals who have benefited from higher asset prices. Federal Reserve rate increases were also a boon to interest income.

Excluding the impact of the Costco sale and a stronger dollar, AmEx’s revenues would have been up 7 per cent.

“Our first quarter performance marks a good start to the year with momentum in the consumer and commercial businesses in the US and in key markets internationally,” said Kenneth Chenault, chief executive. “The results reflect many of the investments we’ve been making to grow the business, plus continued progress in reducing operating expenses”.

Copyright The Financial Times Limited 2017. All rights reserved.
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