American Express profits jump 34%, helped by jump in new customers, higher spending

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Credit card giant American Express posted a 34% jump in its first quarter profits on Friday, helped by more customers spending on its namesake cards as well as more customers keeping a balance on the cards

NEW YORK — Credit card giant American Express posted a 34% jump in its first quarter profits on Friday, helped by more customers spending on its namesake cards as well as more customers keeping a balance on the cards.

The New York-based company said it earned $2.44 billion in the first three months of the year, or $3.33 a share, up from $1.82 billion, or $2.40 a share, a year earlier. The results exceeded Wall Street's expectations, who were looking for roughly $2.95 a share in profits for the quarter.

The jump in profits for AmEx came largely from higher cardmember spending on their accounts as well as more balances collecting interest. The company had $15.8 billion in revenue in the quarter, up 11% from a year earlier.

AmEx customers spent $419.2 billion on their cards in the quarter, up 5% from a year earlier. AmEx takes a small percentage of each transaction spent on their cards as a fee from merchants, which was its primary business model for decades.

But AmEx is now also bringing hefty amounts of interest income, earned on customers who keep a balance and revolve on their accounts now. The company earned $5.06 billion in interest income last quarter on loans to cardmembers, up 28% from a year earlier. Roughly a third of AmEx's revenue now comes from interest income.

The company added 3.4 million new cardmembers in the quarter, with roughly 7 out of every 10 new customers picking up a credit card that has an annual fee attached to it. AmEx executives point to the higher use of fee-based products as a sign