American Express Q3 Earnings Miss Estimates, Shares Drop

Shares of

dropped over 2 percent in after-hours trading after the company reported weaker-than-expected earnings for the third quarter. The New York-based company posted quarterly net income of $1.3 billion, or $1.24 per share, compared to $1.5 billion, or $1.40 per share, in the year-earlier period. Its consolidated total revenue net of interest expense declined 1 percent year-over-year to $8.2 billion from $8.3 billion. However, analysts were expecting earnings of $1.31 per share on revenue of $8.32 billion. The average estimate among 88 Estimize users was for earnings of $1.33 per share and revenue of $8.36 billion. Net income for U.S. Card Services dropped 11 percent year-over-year to $794 million, while International Card Services net income dipped 37 percent to $89 million. Net income for Global Commercial Services slipped 26 percent to $151 million, while Global Network & Merchant Services net income gained 8 percent to $462 million. Consolidated provisions for losses climbed 8 percent to $529 million from $488 million. Consolidated expenses increased 3 percent year-over-year to $5.7 billion in the latest quarter. Its return on average equity narrowed to 26.8 percent, compared to 28.8 percent a year earlier. "While overall results were in line with our 2015 financial outlook, the quarter reflected the headwinds and challenges that we have been dealing with throughout this year," said Kenneth I. Chenault, chairman and chief executive officer. "Reported revenue and billed business levels were suppressed by a stronger U.S. dollar. In addition, the renewals and changes that we made earlier this year to some co-brand relationships also entailed some significant incremental expenses this quarter." For the year, American Express now projects earnings of $5.20 to $5.35 per share. American Express shares fell 2.76 percent to $74.40 in the after-hours trading session.