American Express Q2 net income increased 37 percent
Staff Writer |
American Express Company reported second quarter net income of $2 billion, up 37 percent from $1.5 billion a year ago.
Article continues below
Diluted earnings per share increased 48 percent to $2.10, up from $1.42 a year ago.
Net income from the quarter included a gain of $1.1 billion ($677 million after-tax) from the previously announced sale of the company’s Costco U.S. cobrand card portfolio and a $232 million ($151 million after-tax) restructuring charge related to the company’s efforts to reduce its cost base.
Second-quarter consolidated total revenues net of interest expense were $8.2 billion, down 1 percent from $8.3 billion a year ago.
Excluding the impact of foreign exchange rates due to the impact of a stronger U.S. dollar on international operations, adjusted revenues increased 1 percent, reflecting higher net card fees and net interest income.
These benefits were offset in part by lower Costco-related revenues and a decrease in the average discount rate.
Consolidated provisions for losses were $463 million, down 1 percent from $467 million a year ago. Credit quality remained strong during the quarter. The prior period included $57 million of credit costs associated with the cobrand loan portfolio subsequently classified as “Held for Saleâ€; the credit costs associated with that portfolio for the current quarter were reported in other operating expenses.
Consolidated expenses were $4.8 billion, down 15 percent from $5.6 billion a year ago. The decrease reflected the gain from the loan portfolio sale, which was reported as an expense reduction.
Expenses for the quarter also reflected the previously mentioned restructuring charge, as well as elevated levels of investment spending on growth initiatives.
Operating expenses were down 31 percent versus the prior year. Excluding the portfolio sale gain and restructuring charge, adjusted operating expenses were flat.
The effective tax rate for the quarter was 33 percent, down from 34 percent a year ago.
The company’s return on average equity (ROE) was 26.4 percent, down from 28.1 percent a year ago. ■