American Express beat quarterly profit estimates, driven by greater customer spending.Kai Pfaffenbach/Reuters
Credit card issuer American Express Co’s quarterly profit beat analysts’ estimates on Thursday, as it spent more on its rewards program boosting customer spending.
Shares of the New York-based company were up 2 per cent.
AmEx has been bolstering its rewards programs and relying on partnerships to get customers to spend more. Last year, it renewed partnership with Delta Air Lines Inc that brought in over a million customers over the past two years, the company said.
The rewards program helped push quarterly card customer spending up 4 percent from a year ago.
Total expenses in the quarter went up 11 percent at $7.6 billion, while the company spent $2.46 billion on card rewards, up 4 percent from last year.
AmEx also expects its marketing expenses to rise by $200 million in the year on Delta partnership, as it tries to combat stiff competition for customers from big rival banks, including JPMorgan Chase & Co and Citigroup Inc.
The company missed quarterly revenue estimates for a second straight quarter even though total revenue, excluding interest expense, rose 7 percent to $10.36 billion.
Revenue was hurt by flat growth in its global merchant and network services unit, compared to a year ago, the company said.
Meanwhile, net income fell to $1.55 billion, or $1.80 per share, in the first quarter ended March 31, from $1.63 billion, or $1.86 per share, a year earlier.
Excluding items, the company earned $2.01 per share, ahead of analysts’ expectations of a profit of $1.99 per share.