AmEx revenue misses estimates; sees limited impact from EC cap

American Express’s quarterly revenue narrowly missed expectations as cardmember spending remained muted, and the credit card company said it did not expect much impact from European Commission’s plans to limit fees on card transactions.

The company’s shares, which fell as much as 5 per cent on the Nasdaq on Wednesday following the European Commission’s proposal to limit fees banks can charge to process card payments, were down about 2 per cent in trading after the bell.

The company’s proprietary consumer and credit card business would not be covered by the pricing caps, outgoing Chief Financial Officer Dan Henry said on a post-earnings call. Unlike MasterCard Inc and Visa Inc, which are only payment processors, American Express issues its own credit cards.

Henry, however, said the EC proposal would have a direct impact on the company’s Global Network Services business, under which it partners with banks to issue cards on its network. The business contributes about 17 per cent to the company’s revenue.

American Express, a Dow Jones industrial average component, said cardmember spending increased 8 per cent in the second quarter after adjusting for foreign currency translations -- its fifth successive quarter of single-digit growth after more than two years of double-digit growth.

Corporate expense accounts have come under greater scrutiny in recent months as companies look to cut costs to protect profit margins, hurting American Express, which gets more than a quarter of its US billed business from affluent corporate customers.

“It seems like they are keeping their expenses under control but clearly the hope is that while that happens, the top line will start to pick up,” Sameer Gokhale, an analyst at Janney Capital Markets, said.