April 22, 2010
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News: AmEx Remains On Top For 1st Quarter
Once again the top performer in the credit card industry for first quarter 2010, American Express (AmEx) reported profits more than double from first quarter 2009. Performing better than analysts expected, AmEx increased income to $885 million up from $443 million, a 103 percent increase from the same time last year. Credit card sales also grew during the first quarter to $6.6 billion an 11 percent increase from first quarter 2009 pushing after hours trading up by 1.5 percent. The credit card giant ‘s Chairman and Chief Executive Officer, Kenneth Chenault said an increase in cardholder spending both on the consumer end and corporate end helped to boost earnings. Banks who issue AmEx cards also contributed to the robust bottom line.
Chenault haled the consumer's focus on value and the importance of paying credit card balances in full. Furthermore, he accreted the company's appealing rewards system, legendary customer service and attractive benefits programs as contributing to first quarter's success. The company's credit card division contributed an increase of 14 percent to profits with $428 million compared to it loss of $7 million first quarter 2009. Unlike its major competitors who reported increased profits as a result of increased revenue from card interest and fees, Chenault attributed AmEx's increase to cardholder spending which was up 16 percent. The company's international card division also performed well with revenues up by 9 percent.
Credit card delinquencies of 30 days or more decreased to 3.3 percent down from 5.1 percent from the same time last year; the lowest delinquency rate among the top U.S. card companies. The delinquency rate is the lowest it has been in two years and is a strong indicator of future card defaults. AmEx expects card defaults will continue to decrease as they set aside less than half that of a year ago.