American Express Co. posted a first-quarter profit that exceeded analysts’ estimates as consumers increased their spending on its cards.
Chairman and CEO Kenneth I. Chenault, 61, is cutting about 5,400 jobs this year to contain expenses as Amex rolls out products such as a prepaid card sold by Wal-Mart Stores Inc. to broaden the lender’s client base beyond more affluent credit and charge-card customers.
“We made good headway throughout the business and continue to see very encouraging customer response to initiatives like our reloadable prepaid products and loyalty marketing initiatives,” Chenault said in the statement.
Amex added more than 575,000 new customers through its Bluebird reloadable prepaid card in the four months after introducing the product at Wal-Mart stores in October, the lender said. The cards, which target so-called “unbanked” consumers, allow holders to write checks and have government benefits such as Social Security payments deposited directly into their accounts, which are now eligible for backing from the Federal Deposit Insurance Corp.
The deal with Bentonville, Arkansas-based Wal-Mart may help Amex benefit from U.S. caps on debit-card “swipe” fees that have cut annual revenue for the biggest banks by about $8 billion and prompted some lenders to charge customers for checking accounts. Congress, in passing the fee limits as part of the 2010 Dodd-Frank Act, exempted reloadable prepaid cards.
Net income rose 1.9 percent to $1.28 billion, or $1.15 a share, from $1.26 billion, or $1.07, a year earlier, the New York-based lender said today in a statement. The average estimate of 25 analysts surveyed by Bloomberg was $1.12.