American Express Revenue Jumps

  • Third-quarter net income of $1.2 billion, or $1.03 a share.
  • Total revenue rises 9% year-over-year.
  • Credit expenses continue to decline.

NEW YORK ( TheStreet) - American Express ( AXP) on Wednesday reported third-quarter net income of $1.02 billion, or $1.03 a share, beating the consensus estimate of 96 cents, among analysts polled by Thomson Reuters.

Earnings declined from $1.3 billion, or $1.10 during the second quarter, but increased from $1.1 billion, or 90 cents a share, in the third quarter of 2010.

Total third-quarter revenue -- net of interest expense -- was $7.57 billion, down slightly from $7.62 billion the previous quarter, but up 9% from $6.97 billion a year earlier.
American Express CEO Kenneth I. Chenault

CEO Kenneth Chenault said "Cardmember spending was strong during the third quarter, growing 16 percent to record levels and again outpacing most of the major bank card issuers," adding that "Credit quality continued to be excellent, with key lending metrics improving from the historically strong levels we achieved earlier in the year.

According to credit card master trust data supplied by SNL Financial, American Express continued to lead the "big six" U.S. credit card lenders, with an annualized loss rate for serviced card portfolios of just 2.58% in September, compared to 3.17% for Discover Financial Services ( DFS), 4.13% for JPMorgan Chase ( JPM), 5.54% for Capital One ( COF), 5.87% for Citigroup ( C), and the worst September loss ratio of 5.99%, for Bank of America ( BAC).

American Express also had the lowest 30 plus days delinquency rate for its serviced card portfolios in September, although the delinquency rate increased slightly to 1.64% from 1.56% in August. The company consistently has the strongest card quality among the group. Discover was in second-place with a 30 plus days delinquency rate of 2.50%, with JPMorgan in third-place, with a 2.53% managed card portfolio delinquency rate of 2.53% in September.

American Express's non-interest operating expenses totaled $5.6 billion during the third quarter, increasing from $5.5 billion in the second quarter and $5.0 billion in the third quarter of 2010. Chenault said that "the growth in operating expenses moderated this quarter, as planned, and we expect to further slow that growth towards the end of this year and into next."

The company's third-quarter return on average common equity was a very strong 27.5%, declining slightly from 27.9% the previous quarter, but rising from 25.6% a year earlier.

Shares of American Express closed at $46.13 Wednesday, up 9% year-to-date, which is remarkable performance in a year that has seen most financial names showing significant declines.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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