01—Abstract
Summary
Summary of the 10-Q filed July 23, 2019. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) reported its second-quarter 2019 financial results, demonstrating solid performance with an 8%a increase in total revenues net of interest expense (10% on a foreign currency-adjusted basis) for both the three and six-month periods ended June 30, 2019, compared to the prior year.
This growth was driven by a balanced increase in Card Member spending, loan volumes, and card fees. The company continued to invest in customer engagement, new services, and expanding its merchant network, while also returning significant capital to shareholders through share repurchases and dividends.
Despite a strong U.S. dollar impacting reported international results, adjusted growth was robust, with international proprietary billings showing double-digit growth. The company maintained a strong capital position, exceeding regulatory requirements and continuing its focus on disciplined expense management alongside strategic investments for long-term growth.
02—Key points
Key Highlights
- Total revenues net of interest expense increased by 8% (10% FX-adjusted) for both the three and six months ended June 30, 2019, compared to the prior year, reflecting broad-based growth across businesses.
- Card Member loans grew by 10% year-over-year, indicating successful expansion of lending relationships and new customer acquisition.
- Provisions for losses increased by 7% for the quarter and 6% for the six months, primarily due to higher Card Member loans and receivables, though this growth was below expectations.
- Expenses increased by 9% for the quarter and 10% for the six months, driven by investments in marketing, Card Member rewards, and Card Member services, reflecting higher spending volumes and increased usage of premium benefits.
- Diluted Earnings Per Common Share (EPS) increased by 13% to $2.07 for the quarter and by 5% to $3.87 for the six months, showing improved profitability.
- The company continued to return capital to shareholders, with $0.9 billion and $2.6 billion returned in dividends and share repurchases for the three and six months ended June 30, 2019, respectively.
- Global Consumer Services Group (GCSG) and Global Commercial Services (GCS) segments showed revenue growth, with GCSG up 10% and GCS up 7% in total revenues net of interest expense for the quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed July 23, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $7.08B$6.67B | +6.1% |
| Interest Expense | $891.00M$711.00M | +25.3% |
| Net Income | $1.76B$1.62B | +8.5% |
| EPS (Basic) | $2.07$1.85 | +11.9% |
| EPS (Diluted) | $2.07$1.84 | +12.5% |
| Shares Outstanding (Basic) | 834.00M860.00M | −3.0% |
| Shares Outstanding (Diluted) | 836.00M862.00M | −3.0% |
05—Questions
Frequently Asked Questions
How did American Express perform in terms of revenue growth compared to the previous year?
American Express reported an 8% increase in total revenues net of interest expense for both the three and six-month periods ended June 30, 2019, compared to the same periods in 2018. On a foreign currency-adjusted basis, this growth was 10%.
What is the trend in Card Member loans and what is the provision for losses?
Card Member loans grew by 10% year-over-year, indicating an expansion in lending relationships and new customer acquisitions. The provisions for losses increased by 7% for the quarter and 6% for the six months, primarily due to the growth in Card Member loans and receivables. However, the increase in provisions was noted as being below expectations.
How is the company managing its expenses and what is the impact on profitability?
Total expenses increased by 9% for the quarter and 10% for the six months, largely due to increased investments in marketing, Card Member rewards, and Card Member services, driven by higher spending volumes and continued investment in premium benefits. Despite the rise in expenses, net income increased by 9% for the quarter and 2% for the six months, and diluted EPS grew by 13% to $2.07 for the quarter and 5% to $3.87 for the six months.
What is the company's approach to returning capital to shareholders?
American Express returned approximately $0.9 billion and $2.6 billion to shareholders in the form of common stock dividends and share repurchases during the three and six months ended June 30, 2019, respectively. The company also plans to increase its quarterly common stock dividend to $0.43 per share starting in the third quarter of 2019.
06—Continue