10-QPeriod: Q3 FY2022

AMERICAN EXPRESS CO Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 21, 2022For Securities:AXP

Summary

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 billion. This growth was driven by a significant 19% 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 billion 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.

Financial Highlights

38 data points
Beta

Revenue

$8.73B

Net Income

$1.88B

21.5% Net Margin

EPS (Diluted)

$2.47

Total Assets

$215.00B

Cash & Equivalents

$31.18B

Free Cash Flow

$4.07B

Financial Statements
Beta
Revenue$8.73B
Interest Expense$796.00M
Net Income$1.88B
EPS (Basic)$2.47
EPS (Diluted)$2.47
Shares Outstanding (Basic)748.00M
Shares Outstanding (Diluted)749.00M

Key Highlights

  • 1Total revenues net of interest expense increased 24% year-over-year to $13.6 billion for the third quarter.
  • 2Network volumes grew 19% and billed business increased 21% year-over-year, indicating strong customer spending.
  • 3Net card fees rose 17%, driven by growth in premium card portfolios and high Card Member retention.
  • 4Service fees and other revenue saw a significant 39% increase, primarily due to higher travel-related revenues.
  • 5Card Member loans grew 29% year-over-year, reflecting strong business growth.
  • 6Provisions for credit losses increased, largely due to reserve builds compared to prior period reserve releases, and higher net write-offs.
  • 7The company returned $1.0 billion to shareholders in the third quarter through share buybacks and dividends.

Frequently Asked Questions

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.

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.

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.

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.