American Express Co.'s net income grew 9 percent in the second quarter, as spending by cardholders increased and the credit card issuer set aside less money to cover potential credit losses. A one-time gain related to the company's business travel division also helped boost results.
The New York company's latest earnings beat Wall Street's expectations, but its 5 percent increase in revenue fell short.
Spending by holders of American Express cards grew 9 percent during the April-June period, reflecting gains in the U.S. and abroad.
That helped drive U.S. card services revenue up 6 percent to $4.5 billion, while international card services revenue rose 7 percent to $1.4 billion.
American Express cardholders tend to be more affluent than other credit card users, which is one reason the company has done well as the nation's economy has gradually improved since the recession.
This year, the economy is showing more robust signs of growth, with employers adding an average of 230,000 jobs a month in the first half of the year, up from 194,000 a month in 2013. That's helped knock down the unemployment rate to 6.1 percent, the lowest in nearly six years.
Meanwhile, consumer spending at retail stores picked up an average of 0.5 percent in the April-June quarter after a severe winter weighed on sales earlier this year.
Increased retail spending can help drive profits for credit card issuers like American Express. All told, U.S. credit card debt is up 2.5 percent over the past year, according to the Federal Reserve.
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