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American Express Co. (AXP - Get Report) posted stronger-than-expected first quarter earnings Thursday, and held onto its full-year outlook, but rising expenses and rewards program costs ate into its bottom line.

American Express said adjusted earnings for the three months ending in March came in at $2.01 per share, up 8% from the same period last year and just ahead of the the $1.99 per share consensus forecast. Group revenues rose 7% to $10.36 billion, the company said, but fell modestly short of the Street forecast of $10.49 billion. Group expenses rose 11% to $7.6 billion, with $2.451 billion of that tied to member rewards, American Express said, while earnings were adjusted by 21 cents to reflect legal reserves linked to merchant litigation costs.

"We continued to expand our merchant network and added 3.1 million new proprietary cards in the quarter driven primarily by our digital acquisition initiatives," said CEO Stephen Squeri. "Billings growth remained solid across customer segments and geographies, with strong performance internationally, especially among consumers, small and mid-sized business customers. Loan growth continued to be strong, and credit quality remained at industry-leading levels."

"Looking ahead, we continue to see a number of attractive growth opportunities across our businesses, and we're going to invest to take advantage of those opportunities in order to drive revenue growth over the moderate to longer term," he added.

Ameriacn Express shares were up 1.6% to $113.56.