American Express Co. (AXP.N) said it still expects to boost profits this year. It wasn’t enough.

Shares of the credit-card lender fell in late trading after it said revenue will increase more than it expected but full-year earnings would still be at the high end of the previously forecast range of US$6.90 to US$7.30 in 2018.

Analysts had expected the New York-based firm to boost its forecast as consumers increased spending on its cards. The firm did say revenue will increase by at least 9 per cent this year, 1 percentage point higher than its previous prediction.

“While we are pleased to see higher revenue guidance, we would like to see the higher revenue guidance cause higher EPS guidance,” Chris Donat, an analyst at Sandler O’Neill, said in a note to clients on Wednesday.

The world’s largest credit-card issuer by purchases said the extra revenue will help as it invests more in its businesses. Chief Executive Officer Steve Squeri and Chief Financial Officer Jeff Campbell said Wednesday the firm is focused on expanding acceptance of its cards and signing new co-branded credit-card partnerships.

“Our revenue strength is allowing us to both get to the high end of our guidance range but also put some additional money to work” by spending on initiatives such as better rewards for customers and new co-brand programs, Campbell said on a conference call with analysts.

HIGHER COSTS

Second-quarter expenses jumped 7 per cent to US$7.1 billion, fueled by an increase in marketing and business development costs. During the period, AmEx signed new card partnerships with Amazon.com Inc. and Wells Fargo & Co., which added to its costs, Campbell said.

Shares dropped 3 per cent to US$99.85 at 6:03 p.m. in extended New York trading. The stock has climbed 4.8 per cent this year.

AmEx has had to cut prices so that more merchants will accept its cards, in a quest to reach parity coverage with Visa Inc. and Mastercard Inc. next year. That means customers will start seeing AmEx’s blue logo at smaller stores that have long held out against the cards because of higher fees. AmEx has warned the company’s discount rate, a measure of the fees it charges merchants, will decline by 5 to 6 basis points this year.

AmEx won a years-long legal battle in the second quarter when the U.S. Supreme Court threw out a lawsuit filed by the U.S. government and 11 states that accused the firm of thwarting competition by prohibiting merchants from steering customers to cards with lower fees.

Here’s a quick summary of key numbers from AmEx’s results for the second quarter, announced Wednesday in a statement:

• Net income increased 21 per cent to US$1.62 billion, or US$1.84 a share, from US$1.3 billion, or US$1.47, a year earlier. The average estimate of 27 analysts surveyed by Bloomberg was for adjusted profit of US$1.83 a share. Worldwide billed business, a measure of customer card spending, did jump 10 per cent to US$296.5 billion in the second quarter, topping analysts’ estimates of US$294.1 billion. The credit-card firm had to set aside US$806 million to cover souring loans in the quarter. That was better than the US$825 million average of 17 analyst estimates compiled by Bloomberg. Revenue climbed 9 per cent to US$10 billion in the second quarter, just missing the US$10.1 billion average of 21 analyst estimates compiled by Bloomberg.