10-QPeriod: Q3 FY2023

AMERICAN EXPRESS CO Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 20, 2023For Securities:AXP

Summary

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 billion 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%, 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 billion 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.

Financial Highlights

39 data points
Beta

Revenue

$9.38B

Net Income

$2.45B

26.1% Net Margin

EPS (Diluted)

$3.30

Total Assets

$250.59B

Cash & Equivalents

$43.91B

Free Cash Flow

$7.84B

Financial Statements
Beta
Revenue$9.38B
Interest Expense$1.80B
Net Income$2.45B
EPS (Basic)$3.30
EPS (Diluted)$3.30
Shares Outstanding (Basic)732.00M
Shares Outstanding (Diluted)733.00M

Key Highlights

  • 1Total revenues net of interest expense grew 13% year-over-year to $15.4 billion for the third quarter.
  • 2Diluted earnings per share increased 34% to $3.30, significantly exceeding the prior year's $2.47.
  • 3Worldwide network volumes rose 7% to $420.2 billion, with Travel & Entertainment spend showing a strong 13% increase.
  • 4Net interest income saw a substantial 34% increase, driven by higher interest rates and growth in Card Member loan balances.
  • 5Provisions 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.
  • 6The company returned $1.7 billion to shareholders through dividends and share repurchases during the quarter.
  • 7Common Equity Tier 1 capital ratio remained strong at 10.7%, within the company's target range.

Frequently Asked Questions

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.

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.

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.

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.