Cost cutting eases strong-dollar pain for American Express
By Richa Naidu and Sudarshan Varadhan
(Reuters) - Credit card issuer American Express Co AXP.N reported a better-than-expected second-quarter profit as it benefited from cost-savings after cutting jobs.
Stiff competition, a strong U.S. dollar and sluggish revenue growth in recent years prompted AmEx to announce in January that it would ax over 4,000 jobs this year.
Salaries and employee benefits, AmEx's second-biggest expense, fell 25 percent to $1.25 billion in the three months ended June 30, pulling total costs down by 4 percent to $5.6 billion.
This helped AmEx report earnings of $1.42 per share instead of $1.32 per share as analysts had estimated, according to Thomson Reuters I/B/E/S.
AmEx's net income attributable to common shareholders fell 5 percent to $1.44 billion as a stronger dollar cut into revenue from markets outside the United States. These markets account for about a sixth of the company's revenue.
The dollar has gained about 21 percent against a basket of major currencies in the past 12 months.
Shares of AmEx were down 2 percent at $77.40 in after-market trading.
"(AmEx did) better than our expectations on earnings, but people might focus on revenue being slightly weaker, though a lot of that is driven by FX," FBR & Co analyst Sanjay Sakhrani said. Continued...