AmEx profit misses estimates as costs rise, dollar hurts
(Reuters) - American Express Co, the world's largest credit card issuer, reported a quarterly profit that missed analysts' estimates as costs rose and a strong dollar ate into revenue from its international business.
The company's net income attributable to common shareholders fell to $1.23 billion, or $1.24 per share, in the third quarter ended Sept. 30, from $1.47 billion, or $1.40 per share, a year earlier.
Analysts on average had expected earnings of $1.31 per share, according to Thomson Reuters I/B/E/S.
The New-York based company's shares fell about 2.6 percent to $74.50 in after-market trading on Wednesday.
Costs jumped 7 percent, adjusted for forex changes, due to higher customer rewards and increased spending on marketing and technology development ahead of the expiry of its contract with Costco Wholesale Corp in the United States next year, the company said.
The company's costs also rose due to the impact of certain previously renewed co-brand partnerships.
A strong dollar dragged down revenue from AmEx's international operations by about 11 percent to $1.24 billion, net of interest expense.
The average value of the dollar against a basket of currencies in the third quarter was about 17 percent higher than the same quarter last year.
Total revenue, net of interest expense, fell 1.3 percent to $8.19 billion. Continued...