American Express Profit Rises on Strong Card Use

American Express Co. said Monday that quarterly profit rose 12% to a record as customers charged more on their cards and loan losses declined.

Net income increased to $762 million, or 59 cents a share, from $683 million, or 51 cents, a year earlier, the New York-based company said. Analysts polled by Thomson First Call expected the company to earn 57 cents a share. Revenue rose 6.9% to $6.36 billion, above the $5.94-billion forecast.

American Express, led by Chief Executive Ken Chenault, has been helped as the lowest interest rates in more than four decades spurred credit card borrowing.

Shares of American Express fell 59 cents to $45.01 on the New York Stock Exchange.

The company said it would have $150 million in third-quarter costs to reflect an accounting change. Before the accounting change, the company said, 2003 earnings “are not likely to exceed” $2.29 a share because the company plans to invest more on its existing operations. The average estimate of analysts for the year is $2.26 a share.

In the travel and card division, the company’s biggest business, profit rose 12% to $634 million.

Corporate and consumer clients spent $86.1 billion, or 10% more than in the same period last year, boosting revenue 6.1% to $4.73 billion. Travel commissions and fees rose 1% to $373 million.

The company’s credit cards and travel unit generated 83% of earnings in the second quarter. The contribution from American Express Financial Advisors, its financial planning and mutual fund business, has dwindled. It generated about one-fifth of profit in the second quarter, down from one-third in the first quarter of 2000.

American Express has tried to entice customers to use its cards on more routine purchases such as gasoline and groceries to earn added points toward air travel or 5% cash back on some purchases.