AmEx Reports a Strong Quarter on Higher Usage Domestically And Abroad

Higher cardholder spending and historically low credit losses helped American Express Co. post record first-quarter revenues and earnings.

The company reported on Wednesday that U.S. card-billed business increased 12% to $139.6 billion in the first quarter from $124.1 billion in 2011’s first quarter. Volume outside the U.S. also increased 12% to 71.6 billion from $63.8 billion. In all, AmEx processed $211.2 billion in the first quarter, up 12% from $187.9 billion a year earlier.

AmEx, whose original franchise is the travel-and-entertainment industry, said non-T&E spending in the U.S. grew 14% and accounts for 72% of total U.S. volume. T&E volumes grew 8%. U.S. airline volume, which represents 10% of charges, grew 8% due to a 5% increase in airline transactions and a 3% increase in the average airline charge.

“Spending growth remains strong and we continue to grow above the average rate of our large issue competitors despite difficult prior-year comparisons,” Daniel Henry, chief financial officer at American Express, said in a conference call with analysts on Wednesday. “Given the challenging global economic environment, we’re pleased with the strength of the international billings growth.”

U.S. cards in force grew 3% to 50.9 million from 49.4 million, while the international card count increased 11% to 47.8 million from 43 million. AmEx’s total cards rose 7% to 98.7 million during the quarter, up from 92.4 million in 2011’s first quarter.

Total revenues for the U.S. card-billed business rose 8% to $3.9 billion during the first quarter from $3.6 billion a year earlier. The increase was driven by higher cardholder spending and higher net interest income, the company said.

Total discount revenue generated by worldwide charge volume hit $4.3 billion, up 10% from $3.9 billion a year earlier. Credit quality in AmEx’s card portfolio also continued to improve. In all, revenues net of interest expense grew 4% to $7.2 billion from $6.9 billion in 2011’s first quarter.

Net income for U.S. cards services jumped 35% to $752 million from $555 million in the year-ago period. Total net income for the quarter hit $1.3 billion, up 7% from $1.2 billion a year earlier.

AmEx will be focusing more resources on digital payments this year, Henry said. Of $800 billion in total spending last year, AmEx spent $130 billion on developing digital payments, including its Serve program.

“We think it\'s important that we think about transforming the company because digital will be a big part of the future,” he said, adding AmEx focused last year on signing distribution deals and this year will turn its attention to bringing those clients onto the Serve platform.