American Express Co. (AXP.N) had to ante up as it works to keep its largest card partner happy.
-The credit-card giant said costs rose more than expected, driven by higher marketing and business expenses just weeks after it announced it renewed its longtime partnership with Delta Air Lines Inc. through 2029. Delta previously told investors that the new contract helped increase the airline’s first-quarter revenue by US$100 million.
-The government shutdown and a delay in tax refunds might have weighed on AmEx cardholders. Spending on the firm’s cards increased 4 per cent to US$295.7 billion, missing the US$304 billion average of analyst estimates.
-The firm’s marketing and business development costs climbed 17 per cent, and it also faced a litigation cost that reduced profits by 21 cents a share during the quarter. The firm’s first-quarter expenses swelled 11 per cent to US$7.6 billion, topping the US$7.3 billion average of analyst estimates compiled by Bloomberg.
-AmEx has been pushing to increase acceptance of its cards at more small U.S. businesses in its quest to gain equal coverage with Visa and Mastercard this year. That’s helped boost the amount of fees it collects from merchants: Discount revenue climbed 5 percent to $6.19 billion, below the US$6.31 billion average of estimates compiled by Bloomberg.
- Net income dropped 5 per cent to US$1.55 billion, or US$1.80 per share. Excluding litigation-related charges, the firm posted earnings of US$2.01 per share, topping the US$1.99 average of analyst estimates compiled by Bloomberg.