Summary
American Express Company (AXP) reported a decrease in net income for the third quarter of 2009 compared to the same period in 2008, driven by lower revenues and increased provisions for losses. Total revenues net of interest expense declined by 16% to $6.0 billion, primarily due to a decrease in discount revenue, travel commissions, and securitization income. Provisions for losses, while down overall year-over-year, saw an increase in cardmember lending provisions, reflecting a higher reserve level despite a lower average loan balance. Despite a challenging economic environment, the company demonstrated resilience with improved credit trends and a moderation in charge card losses. Expenses were significantly reduced due to ongoing reengineering initiatives, including a notable reduction in marketing, salaries, and other operating costs. The company also successfully managed its capital and liquidity, with a strong cash position and continued access to funding markets. While the company faces ongoing regulatory and economic uncertainties, management expressed confidence in its long-term positioning for revenue and earnings growth.
Financial Highlights
38 data points| Operating Income | $918.00M |
| Interest Expense | $543.00M |
| Net Income | $640.00M |
| EPS (Basic) | $0.54 |
| EPS (Diluted) | $0.53 |
| Shares Outstanding (Basic) | 1.18B |
| Shares Outstanding (Diluted) | 1.18B |
Key Highlights
- 1Net income decreased by 21% to $640 million ($0.53 diluted EPS) for Q3 2009 compared to $815 million ($0.70 diluted EPS) in Q3 2008, reflecting the impact of the challenging economic environment.
- 2Total revenues net of interest expense decreased by 16% to $6.0 billion, driven by lower discount revenue and reduced securitization income.
- 3Provisions for losses decreased by 13% to $1.2 billion, though cardmember lending provisions increased due to higher reserve levels.
- 4Consolidated expenses decreased significantly by 17% to $3.9 billion, largely due to reengineering initiatives reducing marketing, salaries, and other operating costs.
- 5The company repurchased its preferred shares and warrants issued under the U.S. Treasury Capital Purchase Program (CPP) in Q2 and Q3 2009, respectively.
- 6Card billed business decreased by 11% globally, indicating a slowdown in consumer and business spending.
- 7The company maintained a strong liquidity position with $28.2 billion in cash and readily-marketable securities and healthy capital ratios, exceeding regulatory requirements.