American Express Co. (AXP:US) climbed the most since November 2011 after the credit-card lender reported a third-quarter profit that beat analysts’ estimates.
The shares led the Dow Jones Industrial Average (INDU), advancing 5.1 percent to close at $80.23 in New York, a record high.
Third-quarter profit rose 9.3 percent to $1.37 billion, or $1.25 a share, the lender said yesterday in a statement. That beat the $1.22 average estimate of 26 analysts surveyed by Bloomberg. AmEx, the biggest credit-card issuer by customer purchases, said worldwide card spending, or billed business, rose 7.3 percent to $236.2 billion.
This acceleration is “a clear positive for both investor sentiment and earnings power,” Daniel Furtado, an analyst at Jefferies Group LLC, said today in a note to clients.
American Express customers spent an average $4,037 in the quarter, a 3.9 percent increase from a year earlier.
Provisions for loan losses increased 3 percent to $492 million, AmEx said. Total expenses climbed 5.3 percent to $5.81 billion in the quarter from the prior year. Operating expenses were little changed in the first nine months of the year compared with the same period in 2012. Chief Executive Officer Kenneth I. Chenault, 62, has said he’s seeking to limit annual operating expense growth to 3 percent.
Chenault is cutting 5,400 jobs this year, mostly in travel services, and plans to spin off part of that business. The firm also is vying to drive more spending to its global payments network, signing a deal in August with Wells Fargo & Co., which will issue AmEx-branded cards and give the San Francisco-based bank more options to reward customers for their loyalty.
“AmEx operates the most stable rewards program, best positioned to continue to create value for both consumers and shareholders for years to come,” Bill Carcache, an analyst at Nomura Holdings Inc., said last month in a research note. “Even in the face of aggressive competitor reward campaigns, we expect AmEx to continue to outperform.”
The lender, which issued its first traveler’s check in 1891, is cutting jobs as consumers and businesses rely more on digital technology for bookings. Travel commissions and fees rose 5.4 percent in the third quarter from a year earlier, reversing a decline in the preceding three-month period, according to a financial supplement.
The company has been in talks to spin off half of its business-travel unit and create a joint venture with Certares International Bank LLC. An investor group led by Certares would inject $700 million to $1 billion in return for a 50 percent stake, AmEx said in a Sept. 25 statement.
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