FILE PHOTO: An American Express credit card is seen on a computer keyboard in this picture illustration taken September 6, 2017. REUTERS/Philippe Wojazer/Illustration/File Photo

(Reuters) - American Express Co AXP.N reported a steep rise in quarterly expenses as the credit card issuer spent more to fund its rewards program, overshadowing its profit beat and sending its shares down 3.5 percent in extended trading.

The company has been bolstering its rewards programs as it tries to weather competitive pressures from big bank rivals, including JPMorgan Chase & Co JPM.N and Citigroup Inc C.N.

New York-based AmEx, which has long catered to affluent customers, said it spent $2.43 billion on card member rewards, up 11 percent from a year earlier.

This pushed total expenses up 7 percent to $7.11 billion in the quarter.

Total revenue, net of interest expense, climbed 9 percent to $10 billion.

“Revenue growth was driven by broad-based increases in Card Member spending and fees,” Chief Executive Officer Stephen Squeri said in a statement.

This is the company’s first full quarter of results under Squeri, who replaced long-time boss Kenneth Chenault on Feb. 1.

Net income rose to $1.62 billion, or $1.84 per share, in the second quarter from $1.34 billion, or $1.47 per share, a year earlier.

Analysts on average were expecting earnings of $1.82 per share, according to Thomson Reuters I/B/E/S.