AmEx tops profit estimates on higher consumer spending

October 18, 2018 4:15 PM EDT

An American Express credit card is seen on a computer keyboard in this picture illustration taken September 6, 2017. REUTERS/Philippe Wojazer/Illustration

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(Reuters) - American Express Co (NYSE: AXP) topped Wall Street estimates for third-quarter profit on Thursday and lifted its yearly earnings forecast, as a strengthening U.S. economy powered higher credit card spending.

The credit-card issuer said quarterly card customer spending rose 10.3 percent in the United States and 5 percent in overseas markets during the three months ended Sept. 30.

Rising wages and a strong economy have fueled U.S. consumer spending, with consumer confidence last month reaching its highest level in 18 years.

Payments networks like AmEx and Visa Inc (NYSE: V) earn fees from merchants every time a consumer swipes a card issued by them. They also make revenue from interest paid by customers on overdue spending.

American Express now expects 2018 adjusted earnings of between $7.30 and $7.40 per share, up from the previous $6.90 to $7.30 range.

AmEx said third-quarter net income climbed to $1.65 billion from $1.36 billion a year earlier. On a per-share basis, AmEx earned $1.88, compared with $1.51 in the prior-year quarter.

Analysts on average had expected $1.77 per share, according to Refinitiv data.

Total revenue, net of interest expense, rose 9.2 percent to $10.14 billion, above analysts' estimates of $10.05 billion.

AmEx shares rose 1.6 percent to $104.50 in extended trading on Thursday.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Sai Sachin Ravikumar)

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