01—Abstract
Summary
Summary of the 10-K filed February 25, 2014. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) reported a strong financial performance for the fiscal year 2013, demonstrating healthy growth across key metrics.
The company saw a 4% increase in total revenues net of interest expense, reaching $33.0 billiona, and a significant 20% rise in net income to $5.4 billion. This translated into a 25% increase in diluted earnings per share to $4.88. The company also achieved a notable return on average equity of 27.8%, up from 23.1% in the prior year.
This growth was underpinned by a 7%b increase in billed business, historically low lending write-off rates, and effective cost management, despite a challenging economic environment. American Express continues to focus on its core strengths, including its closed-loop network and spend-centric model, while also investing in digital initiatives to adapt to the evolving payments landscape. The filing highlights the company's diversified business segments, including U.S. Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services.
The Global Network & Merchant Services segment is particularly noted for its strategy of partnering with third-party banks and institutions to expand the American Express network globally. The company is actively managing competition from non-traditional players by transforming its existing businesses and developing new products for the digital marketplace. Significant focus is placed on customer service and brand value, which are considered key competitive advantages.
02—Key points
Key Highlights
- Total revenues net of interest expense increased by 4% to $33.0 billion in 2013.
- Net income rose by 20% to $5.4 billion in 2013.
- Diluted earnings per share grew by 25% to $4.88 in 2013.
- Return on average equity improved to 27.8% in 2013 from 23.1% in 2012.
- Billed business increased by 7% year-over-year, reflecting healthy spending growth.
- Lending write-off rates remained at historically low levels, with consistently low delinquency rates.
- The company is actively investing in digital channels and new products to enhance customer experiences and address evolving market demands.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 25, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Operating Income | $5.36B$4.48B | +19.6% |
| Interest Expense | $1.96B$2.23B | −12.0% |
| Net Income | $5.36B$4.48B | +19.6% |
| EPS (Basic) | $4.91$3.91 | +25.6% |
| EPS (Diluted) | $4.88$3.89 | +25.4% |
| Shares Outstanding (Basic) | 1.08B1.14B | −4.7% |
| Shares Outstanding (Diluted) | 1.09B1.14B | −4.6% |
05—Questions
Frequently Asked Questions
What were the key financial highlights for American Express in 2013?
In 2013, American Express reported a 4% increase in total revenues net of interest expense to $33.0 billion, a 20% rise in net income to $5.4 billion, and a 25% increase in diluted earnings per share to $4.88. The return on average equity also saw a significant improvement, reaching 27.8%.
How is American Express addressing increasing competition from new technologies and non-traditional players?
American Express is transforming its existing businesses and creating new products and services for the digital marketplace to enhance customer experiences in online and mobile commerce. The company is also leveraging emerging technologies to deliver financial products and services, particularly through its Enterprise Growth Group.
What is the role of the Global Network & Merchant Services segment in American Express's strategy?
The Global Network & Merchant Services segment operates a global payments network and acquires merchants. A key part of its strategy is to broaden the Card Member and merchant base worldwide by partnering with third-party banks and institutions to issue American Express-branded Cards and, in some countries, acquire local merchants on the network. This strategy allows for global expansion without significant incremental capital investment or credit risk.
What is the company's approach to managing credit risk?
American Express employs sophisticated credit models and techniques to manage credit risk. The filing notes that lending write-off rates remained at historically low levels in 2013 with consistently low delinquency rates, indicating effective credit risk management. The company actively monitors its merchant base and employs various risk management tools to mitigate exposure.
06—Continue