American Express Earnings Jump 10%
- American Express reports first-quarter earnings per share of $1.07.
- Analysts were expecting EPS of a dollar.
- Total revenue grows 8% year-over-year.
The company reported first-quarter net income of $1.26 billion, or $1.07 a share, increasing from $1.19 billion, or $1.01 a share, during the fourth quarter, and $1.18 billion, or 97 cents a share, during the first quarter of 2011.
The first-quarter earnings came in ahead of the one dollar EPS estimate among analysts polled by Thomson Reuters.
Total first-quarter revenues, net of interest expense, were $$7.61 billion, compared to $7.74 billion the previous quarter, and $7.03 billion a year earlier. First-quarter revenues came in ahead of the consensus estimate of $7.57 billion.
The company's first-quarter provision for loan losses totaled $412 million, increasing from $409 million the previous quarter, and $97 million a year earlier, reflecting "a larger lending reserve release in the year ago period, partially offset by lower net write-offs in the current quarter. Credit quality continued to be at historically strong levels."
CEO Kenneth Chenault said that "Higher cardmember spending, excellent credit metrics and disciplined expense management helped us to start 2012 with record first-quarter earnings and revenues."
For the company's U.S. Card Services division, first-quarter net income was $752 million, increasing from $727 million in the fourth quarter, and from $555 million in the first quarter of 2011. Total expenses in the U.S. Card division declined by 4% year-over-year, which included a 10% decline in salaries and employee expenses, "primarily reflecting higher restructuring and other reengineering costs in the year-ago period."
For the International Card Services division, American Express reported first-quarter net income of $197 million, increasing from $152 million the previous quarter, and $189 million a year earlier.
Global Commercial Services net income during the first quarter was $177 million, declining from $180 million in the fourth quarter and $184 million in the first quarter of 2011.
Global Network and Merchant Services net income increased to $357 million during the first quarter, from $324 million the previous quarter, and $313 million a year earlier.
American Express reported "corporate and other" losses of $227 million during the first quarter, compared to a loss of $191 million the previous quarter and net income of $64 million a year earlier, with the first-quarter 2011 results having "included income of $220 million ($136 million after-tax) for the previously announced MasterCard and Visa settlements."
The company's first-quarter return on average equity was a strong 27.1%, although the ROE declined from 27.7% in the fourth quarter, and 27.9% during the first quarter of 2011.
American Express's shares closed at $58.04 Tuesday, returning 24% year-to-date.