01—Abstract
Summary
Summary of the 10-Q filed July 19, 2024. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) reported a strong second quarter for 2024, demonstrating robust financial performance driven by solid growth across its core businesses.
Total revenues net of interest expense increased by 8% year-over-year to $16.3 billiona, reflecting growth in billed business, strong net card fees, and a significant increase in net interest income. Net income surged by 39% to $3.0 billion, translating to diluted earnings per share of $4.15, a 44% increase from the prior year. This performance was bolstered by the sale of Accertify Inc., which contributed a gain of $531 million.
The company continues to invest in its premium customer base and Membership Model, evidenced by increased marketing expenses and acquisitions like Tock and Rooam, aimed at enhancing its lifestyle services. Despite a challenging economic environment, American Express maintained excellent credit performance, with net write-off and delinquency rates remaining best-in-class. The company also returned substantial capital to shareholders, with $2.3 billionb in share repurchases and dividends in the quarter, underscoring its commitment to shareholder value.
02—Key points
Key Highlights
- Total revenues net of interest expense grew 8% to $16.3 billion for the quarter, and 10% for the first six months to $32.1 billion.
- Net income increased significantly by 39% to $3.0 billion for the quarter, with diluted EPS at $4.15.
- Billed business increased by 5% year-over-year, with particularly strong growth in International Card Services (10% reported, 13% FX-adjusted).
- Net card fees increased 15% year-over-year, driven by high new card acquisitions and strong retention.
- Net interest income saw a substantial 20% increase year-over-year, primarily due to growth in revolving loan balances and higher interest rates.
- Provisions for credit losses increased by 6% for the quarter, driven by higher net write-offs, though credit metrics remain best-in-class.
- The company returned $2.3 billion to shareholders in the form of share repurchases and dividends during the quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 19, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $9.82B$9.43B | +4.1% |
| Net Income | $3.02B$2.17B | +38.7% |
| EPS (Basic) | $4.16$2.89 | +43.9% |
| EPS (Diluted) | $4.15$2.89 | +43.6% |
| Shares Outstanding (Basic) | 716.00M740.00M | −3.2% |
| Shares Outstanding (Diluted) | 717.00M741.00M | −3.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the second quarter?
Revenue growth was primarily driven by a 5% increase in billed business, strong growth in net card fees (up 15%), and a significant 20% increase in net interest income. The increase in net interest income was largely due to higher revolving loan balances and elevated interest rates.
How is American Express managing credit risk, and what are the current credit metrics?
American Express continues to maintain strong credit performance, with net write-off and delinquency rates described as 'best-in-class'. Provisions for credit losses increased by 6% year-over-year for the quarter, primarily due to higher net write-offs, but this is seen as a reflection of disciplined growth and a premium customer base rather than a deterioration in credit quality.
What is the impact of the sale of Accertify, Inc. on the financial results?
The sale of Accertify, Inc., which closed on May 1, 2024, resulted in a pre-tax gain of $531 million ($479 million after tax). This gain contributed positively to the 'Other, net' expense line, effectively reducing total expenses and boosting net income for the quarter.
How is American Express returning capital to shareholders?
During the second quarter of 2024, American Express returned $2.3 billion to shareholders through $1.8 billion in share repurchases and $0.5 billion in common stock dividends. The company intends to continue returning excess capital to shareholders while managing its capital ratios.
06—Continue