10-QPeriod: Q3 FY2019

AMERICAN EXPRESS CO Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 21, 2019For Securities:AXP

Summary

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% 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 billion in the third quarter and $4.3 billion year-to-date, underscoring its commitment to shareholder returns.

Financial Highlights

37 data points
Beta

Revenue

$7.05B

Net Income

$1.75B

24.9% Net Margin

EPS (Diluted)

$2.08

Total Assets

$194.00B

Cash & Equivalents

$25.35B

Free Cash Flow

-$1.42B

Financial Statements
Beta
Revenue$7.05B
Interest Expense$877.00M
Net Income$1.75B
EPS (Basic)$2.09
EPS (Diluted)$2.08
Shares Outstanding (Basic)825.00M
Shares Outstanding (Diluted)827.00M

Key Highlights

  • 1Total 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.
  • 2Net income for the third quarter was $1.76 billion, a 6% increase year-over-year, with diluted EPS rising to $2.08.
  • 3Card Member loans grew by 8% year-over-year, totaling $83.7 billion as of September 30, 2019.
  • 4Provisions for losses increased by 8% in the third quarter, reflecting slightly higher net write-offs and delinquencies.
  • 5Total expenses increased by 9% in the third quarter, driven by investments in marketing, rewards, and Card Member services.
  • 6The company returned $1.8 billion to shareholders in the third quarter through dividends and share repurchases.
  • 7Billed business across all segments grew by 5% year-over-year for the third quarter.

Frequently Asked Questions

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.

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.

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.

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.