Cost cutting eases strong-dollar pain for American Express

Thu Jul 23, 2015 2:01pm EDT
 
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(Corrects to "Visa Inc" from "MasterCard Inc" in paragraph 14)

By Richa Naidu and Sudarshan Varadhan

(Reuters) - Credit card issuer American Express Co (AXP.N: Quote) 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 axe 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. [ID:nBw6f8FwBa]

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.   Continued...

 
An American Express sign is seen on a restaurant door in New York July 22, 2010.  REUTERS/Brendan McDermid