Riding the credit card industry’s wave of better results caused by the improving economy and fewer account defaults, American Express Co. said second-quarter net income for its U.S. card Services unit rose 28.9%, to $665 million from $516 million during the same period a year ago.
Total revenues for the quarter ended June 30, net of interest expense, rose to 5.6%, to $3.8 billion from $3.6 billion, driven by higher card spending but offset by lower interest income from its card-loan portfolio.
U.S. card loan-loss reserves during the quarter fell 56.1%, to $228 million from $519 million a year ago, as credit quality improved substantially.
The New York-based company’s international cards unit reported second-quarter net income of $161 million, up 3.9% from $155 million. Total revenues rose 27.3%, to $1.4 billion from $1.1 billion. Amex’s provision for international card loan-losses fell 13.3%, to $78 million from $90 million.
Amex’s global commercial services reported net income of $177 million, up 58% from $112 million, on revenues of $1.2 billion, up 20% from $1 billion a year ago.
The global network and merchant-services unit’s net income for the quarter was $324 million, up 24.1% from $261 million, on revenues of $1.2 billion, up 9.1% from $1.1 billion.
Overall purchase volume during the quarter hit a new peak, Kenneth Chenault, Amex chairman and CEO, said in a press release. “Cardmember spending was at an all-time high, (and) ... while net interest income was down from last year because of a lower yield on our portfolio, cardmember borrowing rose 2%, reversing the pattern of the past couple of years,” Chenault said.
