NEW YORK: American Express Co reported a steep rise in quarterly expenses as the credit card issuer spent more to fund its rewards programme, overshadowing its profit beat and sending its shares down 3.5 per cent in extended trading.
The company has been bolstering its rewards programmes as it tries to weather competitive pressures from big bank rivals, including JPMorgan Chase & Co and Citigroup Inc .
New York-based AmEx, which has long catered to affluent customers, said it spent US$2.43 billion on card member rewards, up 11 per cent from a year earlier.
This pushed total expenses up seven percent to US$7.11 billion in the quarter.
Total revenue, net of interest expense, climbed nine per cent to US$10 billion.
"Revenue growth was driven by broad-based increases in Card Member spending and fees," Chief Executive Officer Stephen Squeri said in a statement.
This is the company's first full quarter of results under Squeri, who replaced long-time boss Kenneth Chenault on Feb.1.
Net income rose to US$1.62 billion, or US$1.84 per share, in the second quarter from US$1.34 billion, or US$1.47 per share, a year earlier.
Analysts on average were expecting earnings of US$1.82 per share, according to Thomson Reuters I/B/E/S.