01—Abstract
Summary
Summary of the 10-Q filed October 21, 2019. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) reported solid third-quarter and nine-month results for 2019, demonstrating broad-based growth across its businesses and geographies.
Total revenues net of interest expense increased by 8%a for both the three and nine-month periods, driven by growth in Card Member spending, net interest income, and card fees. The company continued to invest in customer engagement, including new benefits for premium card products and expansion of its merchant network. Card Member loans grew by 8% year-over-year, reflecting successful lending relationships and new customer acquisition.
While provisions for losses also increased slightly due to a rise in net write-offs and delinquencies, overall credit quality appears stable. The company returned significant capital to shareholders through dividends and share repurchases, totaling $1.8 billionb in the third quarter and $4.3 billion year-to-date, underscoring its commitment to shareholder returns.
02—Key points
Key Highlights
- Total revenues net of interest expense increased by 8% in the third quarter and year-to-date periods compared to the prior year, reaching $10.99 billion and $32.19 billion, respectively.
- Net income for the third quarter was $1.76 billion, a 6% increase year-over-year, with diluted EPS rising to $2.08.
- Card Member loans grew by 8% year-over-year, totaling $83.7 billion as of September 30, 2019.
- Provisions for losses increased by 8% in the third quarter, reflecting slightly higher net write-offs and delinquencies.
- Total expenses increased by 9% in the third quarter, driven by investments in marketing, rewards, and Card Member services.
- The company returned $1.8 billion to shareholders in the third quarter through dividends and share repurchases.
- Billed business across all segments grew by 5% year-over-year for the third quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed October 21, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $7.05B$6.65B | +6.0% |
| Interest Expense | $877.00M$777.00M | +12.9% |
| Net Income | $1.75B$1.65B | +6.1% |
| EPS (Basic) | $2.09$1.89 | +10.6% |
| EPS (Diluted) | $2.08$1.88 | +10.6% |
| Shares Outstanding (Basic) | 825.00M858.00M | −3.8% |
| Shares Outstanding (Diluted) | 827.00M860.00M | −3.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the third quarter?
Revenue growth was primarily driven by an increase in discount revenue (up 6% for the quarter), net card fees (up 19% for the quarter), and a solid increase in net interest income (up 12% for the quarter). This was supported by a 5% increase in total billed business globally.
How is American Express managing credit risk and loan quality?
Provisions for losses increased by 8% in the third quarter, reflecting slightly higher net write-offs and delinquencies. Card Member loans grew by 8% year-over-year, and the company maintains reserves for losses. The net write-off rate for principal only on Card Member loans was 2.1% for the quarter, consistent with the prior year, and 30+ days past due as a percentage of total loans was 1.5%, also consistent year-over-year.
What is the company's approach to returning capital to shareholders?
American Express actively returns capital to shareholders through dividends and share repurchases. In the third quarter of 2019, the company returned $1.8 billion to shareholders, comprising $0.3 billion in common stock dividends and $1.5 billion in share repurchases.
How is foreign currency fluctuation impacting reported results?
The U.S. dollar remained strong relative to many operating currencies. On an FX-adjusted basis, worldwide proprietary billings increased 7% (compared to 5% reported) and revenues net of interest expense increased 9% (compared to 8% reported) for the third quarter. The company provides FX-adjusted figures to offer a clearer comparison of performance.
06—Continue