01—Abstract
Summary
Summary of the 10-Q filed October 21, 2022. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) reported strong financial results for the third quarter of 2022, with total revenues net of interest expense increasing by 24% year-over-year to $13.6 billiona.
This growth was driven by a significant 19%b increase in network volumes and a 21% rise in billed business, reflecting robust consumer and commercial spending. The company's premium customer base continues to demonstrate strength, contributing to a 17% increase in net card fees and a 39% surge in service fees and other revenue, the latter bolstered by higher travel-related revenues. Despite a challenging macroeconomic environment and foreign currency headwinds, AXP maintained strong revenue growth across its segments.
While provisions for credit losses increased due to reserve builds reflecting loan growth and a less favorable macroeconomic outlook, write-off and delinquency rates remained low. The company also continued to return capital to shareholders, with $1.0 billionc returned through dividends and share repurchases in the quarter. Management expressed confidence in the business model and commitment to long-term growth, while acknowledging ongoing macroeconomic uncertainties.
02—Key points
Key Highlights
- Total revenues net of interest expense increased 24% year-over-year to $13.6 billion for the third quarter.
- Network volumes grew 19% and billed business increased 21% year-over-year, indicating strong customer spending.
- Net card fees rose 17%, driven by growth in premium card portfolios and high Card Member retention.
- Service fees and other revenue saw a significant 39% increase, primarily due to higher travel-related revenues.
- Card Member loans grew 29% year-over-year, reflecting strong business growth.
- Provisions for credit losses increased, largely due to reserve builds compared to prior period reserve releases, and higher net write-offs.
- The company returned $1.0 billion to shareholders in the third quarter through share buybacks and dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed October 21, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $8.73B$7.14B | +22.3% |
| Interest Expense | $796.00M$307.00M | +159.3% |
| Net Income | $1.88B$1.83B | +2.9% |
| EPS (Basic) | $2.47$2.27 | +8.8% |
| EPS (Diluted) | $2.47$2.27 | +8.8% |
| Shares Outstanding (Basic) | 748.00M786.00M | −4.8% |
| Shares Outstanding (Diluted) | 749.00M787.00M | −4.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of American Express's revenue growth in Q3 2022?
The primary driver of revenue growth was a significant increase in network volumes, up 19% year-over-year, and billed business, which rose 21%. This reflects strong spending by both consumer and commercial customers on American Express cards.
How did the company's credit provisions change compared to the prior year?
Provisions for credit losses increased in the third quarter of 2022 compared to the prior year. This was mainly due to reserve builds in the current period, whereas the prior period saw reserve releases. Higher net write-offs also contributed to the increase, reflecting strong loan growth and a more cautious macroeconomic outlook.
What is the company's outlook on returning capital to shareholders?
American Express plans to continue returning excess capital to shareholders through dividends and share repurchases. In the third quarter of 2022, the company returned $1.0 billion to shareholders via these methods and indicated a commitment to ongoing capital returns while supporting balance sheet growth.
How did foreign currency fluctuations impact the results?
The strengthening U.S. dollar had a negative impact on international billings and international expenses. However, the company also reports certain metrics on a foreign currency adjusted basis to provide a clearer comparison of performance without the volatility of exchange rates. For example, total revenues net of interest expense increased 27% on an FX-adjusted basis compared to 24% on a reported basis.
06—Continue