REUTERS: Credit card issuer American Express Co's quarterly profit beat analysts' estimates on Thursday (Apr 18), as it spent more on its rewards program boosting customer spending.
Shares of the New York-based company were up 2 per cent.
AmEx has been bolstering its rewards programs and relying on partnerships to get customers to spend more. Last year, it renewed partnership with Delta Air Lines Inc that brought in over a million customers over the past two years, the company said.
The rewards program helped push quarterly card customer spending up 4 percent from a year ago.
Total expenses in the quarter went up 11 per cent at US$7.6 billion, while the company spent US$2.46 billion on card rewards, up 4 per cent from last year.
AmEx also expects its marketing expenses to rise by US$200 million in the year on Delta partnership, as it tries to combat stiff competition for customers from big rival banks, including JPMorgan Chase & Co and Citigroup Inc.
The company missed quarterly revenue estimates for a second straight quarter even though total revenue, excluding interest expense, rose 7 per cent to US$10.36 billion.
Revenue was hurt by flat growth in its global merchant and network services unit, compared to a year ago, the company said.
Meanwhile, net income fell to US$1.55 billion, or US$1.80 per share, in the first quarter ended Mar 31, from US$1.63 billion, or US$1.86 per share, a year earlier.
Excluding items, the company earned US$2.01 per share, ahead of analysts' expectations of a profit of US$1.99 per share.