OREANDA-NEWS. American Express Company (NYSE:AXP) today reported first-quarter net income of \$1.5 billion, up 6 percent from \$1.4 billion a year ago. Diluted earnings per share rose 11 percent to \$1.48, from \$1.33 a year ago.

(Millions, except percentages and per share amounts)

       
Quarters Ended

March 31,

Percentage

Inc/(Dec)

2015     2014
Total Revenues Net of Interest Expense \$ 7,950 \$ 8,173 (3 )%
Net Income \$ 1,525 \$ 1,432 6 %
Earnings Per Common Share – Diluted:

Net Income Attributable to Common Shareholders1

 \$ 1.48 \$ 1.33 11 %
Average Diluted Common Shares Outstanding 1,023 1,067 (4 )%
Return on Average Equity 29.0 % 28.3 %
 

Results for the quarter were negatively affected by the significant impact of a stronger U.S. dollar on international operations.

First-quarter consolidated total revenues net of interest expense decreased to \$7.9 billion from \$8.2 billion a year ago, down 3 percent (up 1 percent FX adjusted2). Excluding the business travel operations that were part of the company a year ago, adjusted revenues increased 5 percent on an FX adjusted basis3. That increase was driven by higher Card Member spending and higher net interest income.

Consolidated provisions for losses totaled \$420 million, down 13 percent from \$485 million a year ago. The decrease primarily reflected a larger reserve release this quarter compared to last year. Credit indicators continued to be at historically strong levels.

Consolidated expenses totaled \$5.2 billion, down 5 percent (down 1 percent FX adjusted2) from \$5.5 billion a year ago. Excluding business travel operations, adjusted expenses increased 5 percent on an FX adjusted basis3. That increase primarily reflected higher rewards costs and Card Member services, partially offset by lower operating expenses4.

The effective tax rate for the quarter was 34 percent, down from 35 percent a year ago.

The company's return on average equity (ROE) was 29.0 percent, up from 28.3 percent a year ago.

“First quarter results showed solid core performance and continued progress in expanding the American Express franchise despite an impact from several of the headwinds we’re confronting,” said Kenneth I. Chenault, chairman and chief executive officer.

“Underlying performance reflected some familiar themes: higher Card Member spending (3 percent globally, 7 percent on an FX adjusted basis); a modest increase in loans; credit metrics near their historic lows; disciplined cost controls; and a strong balance sheet that allows us to return substantial amounts of capital to shareholders. These results came against the negative impact of a sharply stronger U.S. dollar, an uneven global economy, and the long-term renewal of several cobrand relationships that provide us with lower initial economics than the prior agreements. We also felt the impact from ending our relationship with Costco Canada, which expired at year end.

“During the quarter, we announced the launch of a new loyalty coalition business in the U.S. This business, named Plenti, leverages the success of similar programs in our international markets that are building business for merchants and delivering rewards to more than 60 million participating customers. We also moved forward on initiatives that are gaining broader card acceptance among smaller merchants and aimed at capturing a greater share of U.S. consumers’ everyday spending.

“Separately, based on our strong outcome on the Federal Reserve’s annual stress test, we gained the flexibility to increase the quarterly dividend by 12 percent to 29 cents per share and repurchase up to \$6.6 billion of common shares through second quarter of 2016.

“As previously reported, we expect full year 2015 earnings will be flat to modestly down year-over-year with the headwinds we’re facing and as we ramp up investments to help offset the impact from ending our relationship with Costco in the U.S. next year. Looking further ahead, we have a range of growth opportunities across the business and continue to be very positive about the moderate to long term outlook for our company.”