01—Abstract
Summary
Summary of the 10-Q filed October 20, 2023. Cited figures are marked; the original filing is the authoritative source.
American Express Company reported strong financial results for the third quarter of 2023, with total revenues net of interest expense increasing by 13% to $15.4 billiona and diluted earnings per share rising 34% to $3.30 compared to the prior year period.
This performance was driven by robust Card Member spending, with worldwide network volumes up 7%b, particularly in Travel & Entertainment (T&E) spend which saw a 13% increase. The company also experienced significant growth in net interest income, up 34%, largely due to higher interest rates and an increase in the interest-bearing portion of Card Member loans. Despite an increase in provisions for credit losses, driven by higher net write-offs and loan growth, the company highlighted that net write-off and delinquency rates remained best-in-class, reflecting the strength of its premium customer base and risk management.
American Express continued to return capital to shareholders, deploying $1.7 billionc in the quarter through dividends and share repurchases, while maintaining its Common Equity Tier 1 capital ratio within its target range. Management expressed confidence in its business model and strategy for sustainable long-term growth, despite acknowledging macroeconomic uncertainties.
02—Key points
Key Highlights
- Total revenues net of interest expense grew 13% year-over-year to $15.4 billion for the third quarter.
- Diluted earnings per share increased 34% to $3.30, significantly exceeding the prior year's $2.47.
- Worldwide network volumes rose 7% to $420.2 billion, with Travel & Entertainment spend showing a strong 13% increase.
- Net interest income saw a substantial 34% increase, driven by higher interest rates and growth in Card Member loan balances.
- Provisions for credit losses increased by 58% to $1.2 billion, primarily due to higher net write-offs and increased loan volumes, though delinquency and write-off rates remain strong.
- The company returned $1.7 billion to shareholders through dividends and share repurchases during the quarter.
- Common Equity Tier 1 capital ratio remained strong at 10.7%, within the company's target range.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2023filed October 20, 2023Financial Statements
Q3 FY2023 against Q3 FY2022
| Line item | Q3 FY2023Q3 FY2022 | Change |
|---|---|---|
| Revenue | $9.38B$8.73B | +7.4% |
| Interest Expense | $1.80B$796.00M | +125.9% |
| Net Income | $2.45B$1.88B | +30.4% |
| EPS (Basic) | $3.30$2.47 | +33.6% |
| EPS (Diluted) | $3.30$2.47 | +33.6% |
| Shares Outstanding (Basic) | 732.00M748.00M | −2.1% |
| Shares Outstanding (Diluted) | 733.00M749.00M | −2.1% |
05—Questions
Frequently Asked Questions
How did American Express perform in terms of revenue and profitability in Q3 2023?
American Express demonstrated strong performance in Q3 2023, with total revenues net of interest expense increasing by 13% to $15.4 billion. Diluted earnings per share rose significantly by 34% to $3.30, compared to $2.47 in the same quarter last year, indicating robust profitability.
What drove the increase in Card Member spending?
Card Member spending showed solid growth, with worldwide network volumes up 7% to $420.2 billion. A key driver was the Travel & Entertainment (T&E) segment, which experienced a significant 13% increase in spend, reflecting continued demand for travel and dining.
What is the company's stance on credit quality and provisions for credit losses?
While provisions for credit losses increased by 58% to $1.2 billion, primarily due to higher net write-offs and growth in loan balances, American Express emphasizes that its net write-off and delinquency rates remain best-in-class. This is attributed to its premium global customer base and strong risk management practices. The company continues to monitor credit performance closely.
How is American Express returning capital to shareholders?
American Express remains committed to returning capital to shareholders. In the third quarter of 2023, the company returned $1.7 billion through common stock dividends and share repurchases, demonstrating a continued focus on shareholder returns.
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