American Express Co. (AXP) Tops Q1 EPS by 4c

American Express Co. (NYSE: AXP) reported Q1 EPS of $1.33, $0.04 better than the analyst estimate of $1.29. Revenue for the quarter came in at $8.2 billion versus the consensus estimate of $8.36 billion.

Consolidated provisions for losses totaled $485 million, up 17 percent from $416 million a year ago. The increase reflected a larger reserve release a year ago, offset, in part, by the benefit of lower net write-offs this quarter.

Consolidated expenses totaled $5.5 billion, down 1 percent from $5.6 billion a year ago. The decrease reflected a 4 percent decline in operating expenses3, partially offset by higher rewards costs. Adjusted for foreign currency translations, consolidated total expenses were unchanged from a year ago.

The company's return on average equity (ROE) was 28.3 percent, up from 23.2 percent a year ago.

“We are off to a good start to 2014, thanks to disciplined expense control, credit metrics near their historic low, higher revenues and a strong balance sheet that allows us to return a substantial amount of capital to shareholders,” said Kenneth I. Chenault, chairman and chief executive officer.

“Earnings per share exceeded our long-term target, and the overall performance reflected our ability to manage the business in a way that delivers bottom-line results.

“Card Member spending was up 6 percent globally (7 percent adjusted for foreign currency translations), with higher volumes in the U.S. and internationally. While consumers remain cautious about taking on additional debt, we continued to see a modest increase in Card Member loan balances.

“During the quarter, we launched new initiatives to expand card acceptance among smaller merchants, capture a greater share of U.S. consumers’ everyday spending and extend our loyalty coalition business into Italy. These initiatives are aimed at helping us reach additional segments of the market. They put us in a stronger position to grow over the medium and long term and are making the American Express brand more welcoming and inclusive.

“Once again, we performed very well in the Federal Reserve’s annual stress test. The results provide us with the flexibility to move forward with plans to increase the quarterly dividend by 13 percent and repurchase up to $4.4 billion of shares this year and an additional $1.0 billion during the first quarter of 2015. Our plan remains focused on balancing three priorities: supporting growth strategies, maintaining strong capital ratios and returning a substantial level of capital to our shareholders.”

For earnings history and earnings-related data on American Express Co. (AXP) click here.

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