updated 7/24/2006 5:46:13 PM ET 2006-07-24T21:46:13

American Express Co., which specializes in travel services and credit cards, said Monday that its profit fell nearly 7 percent in the second quarter, reflecting the spinoff last year of its Ameriprise Financial Inc. advisory unit.

Excluding Ameriprise, however, its earnings rose sharply as revenue grew 14 percent on record spending by card holders.

Net income totaled $945 million, or 76 cents a share, in the April-June period, down from $1.01 billion, or 81 cents a share, a year earlier.

Earnings from continuing operations — which included a boost from the sale of the company’s international banking operations in Brazil this year but excluded last year’s Ameriprise results — were $972 million, or 78 cents a share in the second quarter compared with $860 million, or 69 cents a share, a year earlier.

Revenue was $6.88 billion, up from $6.02 billion a year earlier.

The results surpassed the earnings of 74 cents per share on revenue of $6.64 billion expected by analysts surveyed by Thomson Financial.

Still, there were some weaknesses in the second-quarter numbers, said Edwin Groshans, an analyst with Fox-Pitt Kelton in New York who rates the stock “outperform.”

The gain of $144 million in the April-June period on the sale of American Express’ Brazilian card operations to Banco Bradesco SA added about 11 cents to the company’s bottom line, Groshans said. Without that, profits would have missed projections.

In addition, American Express took a charge in the first quarter for its domestic rewards program but didn’t warn investors that another was coming in the second quarter for its overseas customers, he added.

“We didn’t realize we were going to get another” adjustment, he said.

Kenneth I. Chenault, chairman and chief executive, said in a statement accompanying the report that second-quarter results “were driven by record spending on American Express cards, with strong growth among consumers, small businesses and corporations.”

He said that the company added 1.9 million new customers in the quarter, to 74.4 million.

“Overall credit quality remained strong and the underlying momentum of our business continues to be excellent as we enter the second half of the year,” he said.

In the second quarter, the company again took a charge related to higher redemption estimates in its membership rewards program — $40 million after tax for operations outside the United States. It had taken a $73 million after-tax charge for U.S. redemptions in the first quarter.

Net income in the company’s U.S. card services division was $616 million in the second quarter, up 29 percent from $477 million a year earlier.

Profit in the international card unit was unchanged at $225 million in the quarter, while net income in the global network and merchant services division increased to $200 million, up 29 percent from $155 million a year earlier.

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