Amex Reports Strong Quarter, Midmarket Card Target

American Express late yesterday reported third-quarter earnings that showed a gain of more than two million cardholders, double-digit T&E spending growth and continued business travel restructuring during a quarter that yielded an 11 percent increase in income from continuing operations over the previous year. Earnings rose to $0.78 cents per share in 3Q06, or a total of $956 million, from $0.69 or $865 million in 2005.

During a call with financial analysts announcing the results, Gary Crittenden, vice president and CFO at the travel and card services company, cited immediate growth opportunities in Amex's Global Network Services business, which includes agreements with Bank of America, Citigroup, HSBC and MBNA, as well as in its small business and global middle-market corporate business segments. "It's a $950 billion market, with less than 10 percent penetrated by plastic," he said of midmarket corporations. "We'll continue to leverage our sales force in the U.S. and abroad to pursue that opportunity."

The company's corporate services volume grew 14 percent, as did global corporate spending, while travel and entertainment volumes rose 11 percent. United States airline-related volume also continued to grow by 11 percent, due to a 2 percent increase in transactions and a 9 percent higher average airline charge over 2005. The New York-based company continued to see a decrease in travel commissions and fees, as it advanced online transactions.

American Express' third-quarter earnings in 2006 and 2005 included pre-tax costs of $12 million and $86 million, respectively, related to restructuring efforts in its business travel sector, as well as within its finance, international and technology operations in third-quarter 2005.