American Express 3Q profit leaps 71 percent

American Express Co. today said its third-quarter profit jumped 71 percent as its card holders spent more and it wrote off fewer unpaid bills.

For the three months ended Sept. 30, the card company’s net income rose to $1.08 billion, or 90 cents per share, from $632 million, or 53 cents per share, in the year-ago quarter.

Revenue jumped 17 percent to $7.03 billion, from $6.02 billion last year.

Analysts polled by Thomson Reuters, on average, expected profit of 86 cents per share, on revenue of $6.8 billion.

Spending on American Express cards rose 14 percent in the quarter, the company said. The largest increases came from business cards, where the company made changes to various card programs. Revenue from its U.S. cards rose 23 percent to $3.66 billion. International card revenue edged up 1 percent to $1.17 billion.

While Amex customers are typically more affluent than the overall population, Chairman and CEO Kenneth I. Chenault said in a statement that spending remained below levels seen before the recession “as cardmembers continued to manage their finances carefully and pay down outstanding debt.”

That trimmed profit because customers paid less interest on their lower balances, Chenault said, but it helped to improve the company’s risk profile. During the quarter, American Express’ write-off rate dropped below 5 percent of balances for the first time since early 2008. It is the lowest in the industry.

Lower write-downs and delinquencies allowed the company to slash its provision for loan losses, or money set aside to cover loans that it doesn’t expect to collect, by 68 percent to $373 million, from $1.18 billion a year ago.

The company said its move to consolidate securitized loans – those sold to investors – in the first quarter also helped boost profit in the period.

In aftermarket electronic trading, American Express shares dipped 37 cents to $39.90. The stock closed the regular trading session up 54 cents at $40.27.

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