10-QPeriod: Q2 FY2024

AMERICAN EXPRESS CO Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 19, 2024For Securities:AXP

Summary

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 billion, 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 billion in share repurchases and dividends in the quarter, underscoring its commitment to shareholder value.

Financial Highlights

39 data points
Beta

Revenue

$9.82B

Net Income

$3.02B

30.7% Net Margin

EPS (Diluted)

$4.15

Total Assets

$272.22B

Cash & Equivalents

$52.90B

Free Cash Flow

$3.97B

Financial Statements
Beta
Revenue$9.82B
Net Income$3.02B
EPS (Basic)$4.16
EPS (Diluted)$4.15
Shares Outstanding (Basic)716.00M
Shares Outstanding (Diluted)717.00M

Key Highlights

  • 1Total 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.
  • 2Net income increased significantly by 39% to $3.0 billion for the quarter, with diluted EPS at $4.15.
  • 3Billed business increased by 5% year-over-year, with particularly strong growth in International Card Services (10% reported, 13% FX-adjusted).
  • 4Net card fees increased 15% year-over-year, driven by high new card acquisitions and strong retention.
  • 5Net interest income saw a substantial 20% increase year-over-year, primarily due to growth in revolving loan balances and higher interest rates.
  • 6Provisions for credit losses increased by 6% for the quarter, driven by higher net write-offs, though credit metrics remain best-in-class.
  • 7The company returned $2.3 billion to shareholders in the form of share repurchases and dividends during the quarter.

Frequently Asked Questions

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.

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.

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.

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.