The American Express Co reported on Monday that its third-quarter earnings had more than doubled from the period a year earlier, when it was suffering from a slump in travel and spending after the terrorist attacks, bad junk-bond investments and costs from layoffs.
This year, earnings rose to US$687 million, or US$0.52 a diluted share, from US$298 million, or US$0.22 a share, in the third quarter of 2001. The US$0.52 was a penny more than the average forecast by Thomson First Call. Even after excluding restructuring charges of US$352 million and one-time costs of US$98 million associated with the terrorist attacks, net income increased 15 percent. Revenues totaled US$5.9 billion, up 3 percent from US$5.7 billion.
American Express, the US' fourth-largest credit-card issuer, also reiterated that it did not expect 2002 earnings to top US$2.01 a share. Shares of American Express rose 3.4 percent on Monday, or US$1.12, to close at US$34.25 -- still 24 percent off its 52-week high of US$44.91.
"The results reflect stronger revenue momentum in the card businesses," CEO Kenneth Chenault, said.
Chenault also said American Express "realized substantial benefit from cost control and risk management programs during the quarter."
Third-quarter earnings at the company's Travel Related Services unit, which includes its charge-card and credit-card businesses, more than doubled, to US$553 million, from US$248 million. Revenue at the unit increased 5 percent. Excluding last year's one-time charges, net income rose 28 percent at the unit.
Analysts said earnings from the credit card units added to a sense of strength in consumer spending. But the company's results in its other businesses, analysts said, confirm that consumers are still slowly returning to travel and that asset management continues to suffer with the weak equity market.
Credit card billings, a measure of volume, were up 7 percent. The increase "has been one of the pleasant surprises for the charge card industry this year in general," said Bradley Ball, an analyst with Prudential Securities. "What we're seeing is in many ways consistent with what we've seen in the top players in the industry, especially players that focus on the prime and super-prime customers." Ball has a buy rating on American Express stock.
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