FIRST-quarter profit at American Express rose 33 per cent from a year ago, beating expectations, the firm said yesterday.
But its expenses soared 19 per cent to $5.2bn (£3.2bn), knocking shares in the credit card lender and processing network down 1.8 per cent.
The company’s wealthy customers spent more on their credit cards than a year earlier, but expenses outpaced American Express’s revenue growth as it spent more on rewards programs for its customers.
The New York-based company said yesterday it earned $1.18bn in the first-quarter, up from $885m a year earlier.
Revenues rose seven per cent from a year earlier, slightly more than expected, to $7.03bn.
The biggest increases in expenses came from what the company spends on its rewards programs for customers. Marketing expenses also rose 15 per cent.
“If they are actually picking up some competitive advantage by spending now, I’ll be delighted,” said Michael Holland, chairman of shareholder Holland & Co. “They don’t have a history of being wasteful with expenditures, but time will tell.”