Summary
American Express Company (AXP) reported its first-quarter 2009 financial results amid a challenging economic environment characterized by a global recession, tightening credit markets, and declining consumer and business confidence. Total revenues net of interest expense decreased by 18% year-over-year to $5.9 billion, largely driven by a significant drop in discount revenue and interest income, reflecting slower cardmember spending and lower loan volumes. Despite a 22% reduction in consolidated expenses due to reengineering initiatives and lower marketing and rewards costs, provisions for losses increased by 49% to $1.8 billion, primarily due to deteriorating credit conditions. Consequently, net income attributable to common shareholders declined by 56% to $437 million ($0.31 per diluted share). The company's participation in the U.S. Treasury's Capital Purchase Program (CPP) resulted in the issuance of preferred shares and warrants, impacting its capital structure and imposing certain restrictions. While the company has taken steps to strengthen its balance sheet and manage costs, it anticipates continued economic headwinds and elevated credit losses throughout 2009.
Financial Highlights
22 data points| Operating Income | $544.00M |
| Interest Expense | $555.00M |
| Net Income | $437.00M |
| EPS (Basic) | $0.31 |
| EPS (Diluted) | $0.31 |
| Shares Outstanding (Basic) | 1.16B |
| Shares Outstanding (Diluted) | 1.16B |
Key Highlights
- 1Total revenues net of interest expense decreased 18% to $5.9 billion compared to the prior year's quarter, reflecting a slowdown in customer spending and lower loan volumes.
- 2Provisions for losses significantly increased by 49% to $1.8 billion due to the challenging credit environment, leading to higher write-off and delinquency rates.
- 3Net income attributable to common shareholders fell 56% to $437 million ($0.31 diluted EPS) compared to the prior year, impacted by lower revenues and higher provisions for losses.
- 4Consolidated expenses decreased by 22% to $3.6 billion, driven by reengineering initiatives, lower marketing, rewards, and employee costs.
- 5The company participated in the U.S. Treasury's Capital Purchase Program (CPP), issuing preferred shares and warrants for $3.39 billion, which strengthened its capital base.
- 6Cardmember spending (billed business) declined 16% globally, with a notable 18% decrease in average spending per proprietary basic card.
- 7Delinquency and write-off rates for cardmember lending continued to deteriorate, particularly in the U.S. Card Services and International Card Services segments.