American Express (AmEx) reported U.S. card service after-tax income rose 4% year-on-year (Y/Y) in the second quarter (Q2/14) to $770 million, compared to $743 million one-year ago.
The gross dollar volume for the U.S. card business rose 9% in the second quarter to $136.5 billion, compared to $125.6 billion for Q2/13.
Overall, AmEx net income rose 9% to $1.529 billion, compared to $1.405 billion one-year ago.
Marketing and promotion expenses were up a staggering 25% Y/Y to $985 million. Cardholder rewards cost soared 11% to $1773 million.
As with other top U.S issuers, AmEx benefited from lower delinquency and charge-off ratios in the second quarter. Delinquency dropped to 90 basis points (bps) from 100 bps on Q2/13. Charge-offs likewise declined from 200 bps on Q2/13 to 160 bps in Q2/14.
The AmEx net interest yield remained flat at 9.1% for the second quarter.
AmEx noted that total revenues net of interest expense increased 6% to $4.5 billion from $4.2 billion a year ago. The rise largely reflected a 9% increase in cardholder spending and higher net interest income.
Provisions for losses totaled $339 million, down 5% from $356 million a year ago. The decrease reflected lower net write-offs in the current quarter, offset, in part, by a larger reserve release a year ago.
Total expenses increased 8% to $2.9 billion from $2.7 billion a year ago.
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Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non‐proprietary billed business), and certain insurance fees charged on proprietary cards. In‐store spend activity within retail co‐brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non‐proprietary billed business. Card billed business is reflected in the United States or outside the United States based on where the issuer is located.
Total cards‐in‐force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards‐ in‐force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards‐in‐force include basic and supplemental
cards issued to employee Card Members. Non‐proprietary cards‐in‐force includes all cards that are issued and outstanding under network partnership agreements, except for retail co‐brand Card Member accounts that have no out‐of‐store spend activity during the prior 12 month period.