NEW YORK ? American Express card holders used their cards more and spent more in the third quarter than a year earlier, the company said Wednesday, crediting those increases for a 13 percent jump in its net income.
Card holders spent $3,739 on average using American Express Inc. cards during the quarter, a 12 percent increase from last year, while card user spending rose 16 percent overall.
Chief Financial Officer Dan Henry said during a conference call that the increase in average spending has continued during the first few weeks of October.
But American Express customers ? who tend to be wealthier than other credit card holders and less affected by the struggling economy ? apparently are avoiding accumulating debt just like the less well-heeled. Henry said significantly more American Express customers are paying off their balances in full each month.
People who pay off their accounts with each statement now represent about 29 percent of the company's portfolio, compared with 16 percent in 2008's second quarter, before the financial crisis took hold.
For the three months that ended Sept. 30, American Express posted net income of $1.24 billion, or $1.03 per share, compared with $1.09 billion, or 90 cents per share, a year earlier. Its quarterly revenue rose 9 percent to $7.57 billion.
Analysts, on average, were expecting profit of 95 cents per share on revenue of $7.58 billion, according to data provided by FactSet.
New York-based American Express enjoyed the lowest rate of late payments and defaults on balances in the industry, reflecting both its customers' greater affluence and its strict management of problem accounts. A drop in delinquency and default rates over the past year allowed American Express to set aside 33 percent less money to cover unpaid bills, or a total of $249 million.
The company said that increased use of American Express cards reflects an industrywide trend of consumers maximizing the benefits they get from spending money by taking advantage of rewards programs.
"We believe that to the extent card members redeem points, we have greater engagement," Henry said. "They spend more with us."
But the program can be costly. American Express said its expenses rose 13 percent to $5.6 billion, including a 24 percent jump in rewards program costs. The company said it trimmed its marketing and promotion costs to offset that increase.
Some analysts have raised concern about rising expenses in recent quarters.
Chairman and CEO Kenneth Chenault said in a statement that the increase is expected to slow through the rest of this year and in 2012.
American Express shares closed Wednesday at $46.13, down 55 cents. They shed another 36 cents after hours after the company reported its results.
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