NEW YORK – Profits at American Express Co. (AXP), which specializes in travel services and credit cards, soared 16 percent in the second quarter from a year earlier on strong growth in card member spending and improved credit quality, the company said Monday.
Net income for the April-June period totaled a record $1.01 billion, or 81 cents a share, compared with profits of $876 million, or 68 cents a share, a year earlier.
Revenue in the quarter was $8 billion, up from $7.23 billion a year earlier.
The profit was well above the 78 cents per share expected by analysts surveyed by Thomson Financial. Revenue also beat their projection of $7.78 billion.
American Express shares rose 58 cents, or 1 percent, to $55.15 on the New York Stock Exchange (search).
American Express said its revenue growth "reflects record card member spending, increased cards in force, a rise in card member lending balances and higher levels of invested assets."
Kenneth I. Chenault (search), chairman and chief executive officer, said in a statement: "Strong momentum in our card business and excellent credit quality drove another quarter of record earnings."
He said the company added 1.2 million card holders in the quarter.
Chenault also said the company will go ahead with its previously-announced plan to spin off American Express Financial Advisors, its financial planning unit, "at the end of the third quarter."
In the company's travel services division, net income totaled $808 million, up 10 percent from $732 million a year earlier.
The financial advisory unit reported profits of $140 million, down 19 percent from $174 million a year earlier. The results included a $54 million charge related to the spin-off.
American Express Bank reported earnings of $61 million, more than double the $28 million of a year earlier in large part because of a tax benefit.
For the first six months of the year, American Express earned nearly $2 billion, or $1.56 a share, up from $1.67 billion, or $1.29 a share, in the first half of 2004. Revenue rose to $15.58 billion from $14.14 billion a year earlier.