NEW YORK – American Express Co. (AXP), the consumer finance and travel company, reported a 19 percent increase in earnings for the first quarter, driven by strong growth in its card business.
The New-York based company said Tuesday that profits totaled a record $946 million, or 75 cents a share, in the January-March period, up from $794 million, or 61 cents a share, a year earlier. The year-ago total had been reduced by a charge for a change in accounting.
Revenue rose 10 percent to $7.57 billion from $6.91 billion a year earlier.
Analysts surveyed by Thomson Financial had expected earnings of 75 cents a share on revenue of $7.55 billion.
American Express shares rose after the results were announced. They advanced 38 cents to $51.35 on the New York Stock Exchange (search).
Chairman and Chief Executive Officer Kenneth I. Chenault (search) said in a statement accompanying the report that the company's card business was especially strong — and looked solid for future quarters.
"We generated record earnings again this quarter, driven by strong growth in our card businesses," Chenault said.
He said that consumers, small businesses and corporate clients spent more on American Express cards. At the same time, the company said, the bottom line benefited from higher net yields on its lending portfolio and higher net investment income.
Chenault added: "We made substantial investments in brand-related marketing programs and have a strong pipeline of new card products and service enhancements for later this year."
Profits in the company's travel related services division rose to a record $801 million in the first quarter from $665 million a year earlier.
But earnings at the American Express Bank were almost unchanged at $30 million. The company said higher commissions and fees in the division were offset by lower net interest income and higher operating expenses.
Profits at American Express Financial Advisors (search), the company's financial planning unit, were up 5 percent to $166 million in the first quarter from $157 million a year earlier.
American Express announced in February that it plans to spin off the financial advisory business so it can focus on the faster-growing charge and credit card, payments processing and travel businesses.
Chenault said in his statement Tuesday that "we are on track with plans to spin off American Express Financial Advisors to our shareholders and recognized some of the initial expenses associated with this transaction during the quarter."
The deal is expected to be completed in the third quarter.
Also Tuesday, American Express said that the London-based Lloyds TSB bank would begin issuing credit cards that will clear on the American Express network.