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Kai Pfaffenbach/Reuters

American Express posted a 9-per-cent gain in second-quarter profits on Friday, helped by more of its card members carrying a credit card balance and increased spending on its namesake cards.

The New York company said it earned a profit of US$1.76-billion, or US$2.07 a share. That’s up from earnings of US$1.62-billion, or US$1.84 a share, in the same period a year earlier. Analysts were looking for AmEx to earn US$2.03 a share, according to FactSet.

The improving economy has convinced more U.S. consumers to spend, and take on increasing amounts of credit-card debt, which benefits AmEx’s bottom line. Its card members spent US$311.7-billion on its cards worldwide in the quarter, up from US$296.5-billion a year earlier.

Meanwhile individual U.S. card member spending rose to $5,445 in the quarter, up from $5,275 in 2018.

American Express makes most of its money from fees it charges merchants to accept their cards. The more money spent by consumers at these merchants, the more AmEx earns in processing fees.

AmEx has also been encouraging its customers to carry a balance, even on its traditional cards that typically had to be paid off at the end of each month. The company had US$72.6-billion in loans to customers at the end of the second quarter, up from US$66.3-billion a year earlier.

Other financial companies have been reporting similar gains in their consumer banking businesses. JPMorgan Chase and Citigroup, two of American Express’ biggest competitors, both reported higher credit-card revenue and interest revenue.

Total revenue for the company, net of interest expense, was US$10.84-billion, up from US$10-billion a year earlier.

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