10-QPeriod: Q1 FY2022

AMERICAN EXPRESS CO Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 22, 2022For Securities:AXP

Summary

American Express Company (AXP) reported strong first-quarter 2022 results, demonstrating robust growth momentum across its businesses. Total revenues net of interest expense surged by 29% year-over-year to $11.7 billion, driven by a significant 30% increase in worldwide network volumes. This top-line growth was fueled by a 34% rise in billed business and a 19% increase in Goods & Services spend, alongside a substantial 119% surge in Travel & Entertainment spend, nearing pre-pandemic levels. The company's profitability saw a slight decrease in pretax income (-9%) and net income (-6%) compared to the prior year, largely due to a shift from a significant reserve release in Q1 2021 to a smaller release in Q1 2022, reflecting the continued economic recovery. Despite this, American Express demonstrated strong capital returns, repurchasing $1.5 billion in shares and increasing its quarterly dividend by 21%, underscoring its commitment to shareholder value. The company's capital ratios remain strong, well above regulatory requirements.

Financial Highlights

38 data points
Beta

Revenue

$7.64B

Net Income

$2.10B

27.5% Net Margin

EPS (Diluted)

$2.73

Total Assets

$196.00B

Cash & Equivalents

$27.68B

Free Cash Flow

$3.43B

Financial Statements
Beta
Revenue$7.64B
Interest Expense$321.00M
Net Income$2.10B
EPS (Basic)$2.73
EPS (Diluted)$2.73
Shares Outstanding (Basic)757.00M
Shares Outstanding (Diluted)758.00M

Key Highlights

  • 1Total revenues net of interest expense increased 29% year-over-year to $11.7 billion, driven by strong volume growth.
  • 2Worldwide network volumes grew 30% to $350.3 billion, with billed business up 34%.
  • 3Travel & Entertainment (T&E) spend saw a significant rebound, increasing 119% year-over-year.
  • 4Card Member loans grew 27% to $88.8 billion, indicating increased customer borrowing.
  • 5Provisions for credit losses increased significantly year-over-year due to a smaller reserve release, as the prior year benefited from larger releases related to economic recovery.
  • 6The company returned $1.9 billion to shareholders through dividends ($0.4 billion) and share repurchases ($1.5 billion) in the quarter.
  • 7Common Equity Tier 1 capital ratio remained strong at 10.4%, exceeding regulatory requirements.

Frequently Asked Questions

American Express reported a strong revenue performance in the first quarter of 2022, with total revenues net of interest expense increasing by 29% to $11.7 billion, compared to $9.1 billion in the prior year. This growth was primarily driven by a substantial increase in network volumes and billed business.

Provisions for credit losses were significantly lower (a net benefit) in Q1 2021 due to large reserve releases as the company anticipated economic recovery. In Q1 2022, the reserve release was smaller, resulting in higher provisions for credit losses compared to the prior year. This shift contributed to a 6% decrease in net income, despite strong revenue growth.

The company demonstrated a strong commitment to returning capital to shareholders. In the first quarter of 2022, American Express returned $1.9 billion, comprising $0.4 billion in common stock dividends and $1.5 billion in share repurchases. Notably, the quarterly common stock dividend was increased by 21%.

The company's balance sheet shows growth in Card Member loans and receivables, up 27% and 27% respectively. Its capital position remains robust, with a Common Equity Tier 1 (CET1) ratio of 10.4%, which is comfortably above regulatory minimums. Customer deposits also saw healthy growth, increasing to $90.9 billion.