Summary
In the second quarter of 2009, American Express Company (AXP) reported a significant year-over-year decline in net income, reflecting the challenging economic environment. Net income attributable to common shareholders was $102 million, down from $650 million in the prior year's second quarter, with diluted earnings per share falling to $0.09 from $0.56. This downturn was driven by a substantial decrease in total revenues net of interest expense, which fell 18% to $6.1 billion, impacted by lower discount revenue, travel commissions, and securitization income. The company also incurred $182 million in restructuring charges related to workforce reductions, impacting salaries and employee benefits. Despite the headwinds, American Express took steps to strengthen its financial position. The company successfully repurchased its preferred shares issued under the U.S. Treasury's Capital Purchase Program and repaid the associated warrant, demonstrating progress in deleveraging. Furthermore, the company saw improvements in certain credit trends, with lower-than-anticipated net write-offs and improving delinquency trends in its U.S. cardmember lending portfolio. These factors allowed American Express to maintain a cautious but optimistic outlook, with plans to selectively invest in business-building initiatives while managing costs.
Financial Highlights
38 data points| Operating Income | $418.00M |
| Interest Expense | $547.00M |
| Net Income | $337.00M |
| EPS (Basic) | $0.09 |
| EPS (Diluted) | $0.09 |
| Shares Outstanding (Basic) | 1.16B |
| Shares Outstanding (Diluted) | 1.17B |
Key Highlights
- 1Net income attributable to common shareholders significantly decreased to $102 million ($0.09 per diluted share) from $650 million ($0.56 per diluted share) in the prior year's second quarter.
- 2Total revenues net of interest expense declined 18% year-over-year to $6.1 billion, primarily due to lower discount revenue and travel commissions.
- 3The company recorded $182 million in net restructuring charges, impacting its workforce by approximately 4,000 positions, as part of ongoing cost reduction efforts.
- 4American Express successfully repurchased its preferred shares from the U.S. Treasury under the Capital Purchase Program and later repurchased the associated warrant.
- 5Cardmember spending remained under pressure, with a 16% decrease in global billed business year-over-year.
- 6Despite a challenging credit environment, the company noted that increases in net write-offs were less than initially anticipated, and lending past due trends continued to improve.
- 7The company launched new deposit-taking programs to diversify its funding sources, increasing retail deposits by $2.1 billion in the quarter.