Fourth-Quarter 2022 Revenue Increased 17% to a Record $14.2 Billion, Driven by Highest Ever Quarterly Card Member Spending; EPS for Quarter Was $2.07
Company Expects Full-Year 2023 Revenue Growth of 15% to 17% and EPS of $11.00 to $11.40 as It Continues to Execute on Its Growth Plan
NEW YORK–(BUSINESS WIRE)–American Express Company (NYSE: AXP) today reported full-year net income of $7.5 billion, or $9.85 per share, compared with net income of $8.1 billion, or $10.02 per share, a year ago.
($ in millions, except per share amounts, and where indicated)
Quarters Ended
December 31,
Percentage
Inc/(Dec)
Years Ended
December 31,
Percentage
Inc/(Dec)
2022
2021
2022
2021
Total Network Volumes (Billions)
$413.3
$368.1
12
$1,552.8
$1,284.2
21
Total Revenues Net of Interest Expense
$14,176
$12,145
17
$52,862
$42,380
25
Total Provisions for Credit Losses
$1,027
$53
#
$2,182
$(1,419)
#
Net Income
$1,572
$1,719
(9)
$7,514
$8,060
(7)
Diluted Earnings Per Common Share1
$2.07
$2.18
(5)
$9.85
$10.02
(2)
Average Diluted Common Shares Outstanding
746
769
(3)
752
790
(5)
# – Denotes a variance of 100 percent or more.
“We ended 2022 with record revenues, which grew 25 percent from a year earlier, and earnings per share of $9.85, both well above the guidance that we provided when we introduced our long-term growth plan at the start of last year, despite a mixed economic environment,” said Stephen J. Squeri, Chairman and Chief Executive Officer.
“Our performance demonstrates that our strategy is working, and our business is in an even stronger position today than before the pandemic. We have significantly grown the company’s revenue base by investing in our value propositions, increasing our generational relevance, growing merchant acceptance, introducing new digital capabilities, and enhancing our Membership Model with new lifestyle offerings and financial services.
“This has led to sustained growth in customer acquisitions – which reached a record 12.5 million new Card accounts in 2022 – along with high levels of engagement and retention, which has enabled us to build scale while driving momentum across our core businesses. Our credit metrics remain strong, supported by our premium customer base, exceptional risk management capabilities and the thoughtful actions we have taken throughout the year.
“Given our momentum, we expect 2023 revenue growth of 15 percent to 17 percent and earnings per share of $11.00 to $11.40. Our performance to date and the opportunities ahead position us well to deliver on our longer-term growth plan aspirations for double-digit annual revenue growth and mid-teens EPS growth.”
Consolidated total revenues net of interest expense for the full year were $52.9 billion, up 25 percent from $42.4 billion a year ago. The increase primarily reflected growth in Card Member spending compared to the prior year.
Consolidated provisions for credit losses for the full year were $2.2 billion, compared with a benefit of $1.4 billion a year ago. The change reflected a reserve build of $617 million, compared with a reserve release of $2.5 billion in the prior year. Credit metrics remained strong throughout the year and below pre-pandemic levels.
Consolidated expenses for the full year were $41.1 billion, up 24 percent from $33.1 billion a year ago, primarily reflecting higher customer engagement costs driven by higher network volumes and increased usage of travel-related benefits throughout the year. Operating expenses also increased, primarily reflecting net losses of $302 million related to Amex Ventures investments in the current year compared with net gains of $767 million in the prior year, as well as higher compensation costs in the current year.
The consolidated effective tax rate for the full year was 21.6 percent, down from 24.6 percent a year ago, primarily reflecting discrete tax benefits in the current year related to the resolution of prior-year tax items.
Fourth-Quarter 2022 Results
For the fourth quarter of 2022, the company reported net income of $1.6 billion, or $2.07 per share, compared with net income of $1.7 billion, or $2.18 per share, a year ago.
Fourth-quarter consolidated total revenues net of interest expense were $14.2 billion, up 17 percent from $12.1 billion a year ago. The increase was primarily driven by increased Card Member spending, as well as higher net interest income, reflecting higher average loan volumes.
Consolidated provisions for credit losses were $1.0 billion, compared with $53 million a year ago. The increase reflected a reserve build of $492 million, compared with a net reserve release of $168 million a year ago, as well as higher net write-offs in the current quarter. Credit metrics remained strong in the current quarter and below pre-pandemic levels.
Consolidated expenses were $11.3 billion, up 15 percent from $9.8 billion a year ago. The increase primarily reflected higher customer engagement costs, driven by higher network volumes and increased usage of travel-related benefits, and was partially offset by lower marketing expenses in the current quarter. Operating expenses also increased, primarily reflecting higher compensation costs and a net loss on Amex Ventures investments of $234 million in the quarter.
The consolidated effective tax rate was 16.0 percent, down from 25.5 percent a year ago, primarily reflecting discrete tax benefits related to the resolution of prior-year tax items in the current quarter.
Planned Dividend Increase
The company plans to increase the regular quarterly dividend on its common shares outstanding by 15 percent, from $0.52 to $0.60 per share, beginning with the first quarter 2023 dividend declaration.
U.S. Consumer Services reported fourth-quarter pretax income of $1.3 billion, flat with the prior year.
Total revenues net of interest expense were $6.5 billion, up 23 percent from $5.3 billion a year ago. The increase was primarily driven by higher net interest income, reflecting higher average loan volumes, and increased Card Member spending.
Provisions for credit losses were $542 million, compared with a benefit of $9 million a year ago. The increase reflected a reserve build of $269 million, compared with a net reserve release of $133 million a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $4.7 billion, up 17 percent from $4.0 billion a year ago, primarily reflecting higher customer engagement costs, which were driven by higher network volumes and increased usage of travel-related benefits, and partially offset by lower marketing expenses in the current quarter.
Commercial Services reported fourth-quarter pretax income of $547 million, compared with $717 million a year ago.
Total revenues net of interest expense were $3.6 billion, up 15 percent from $3.1 billion a year ago. The increase was primarily driven by increased Card Member spending.
Provisions for credit losses were $271 million, compared with $9 million a year ago. The increase reflected a reserve build of $135 million, compared with a net reserve release of $29 million a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $2.7 billion, up 16 percent from $2.4 billion a year ago, primarily reflecting higher customer engagement costs, driven by higher network volumes.
International Card Services reported a fourth-quarter pretax loss of $15 million, compared with pretax income of $40 million a year ago. Results for this segment were significantly impacted by the strengthening of the U.S. dollar.
Total revenues net of interest expense were $2.4 billion, up 14 percent (25 percent FX-adjusted) from $2.1 billion a year ago. The increase was primarily driven by increased Card Member spending and foreign exchange-related revenue.
Provisions for credit losses were $210 million, compared with $53 million a year ago. The increase reflected a reserve build of $87 million, compared with a net reserve build of $3 million a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $2.2 billion, up 10 percent from $2.0 billion a year ago, primarily reflecting higher customer engagement costs and increased compensation expenses. The increase in customer engagement costs was driven by higher network volumes and increased usage of travel-related benefits, and partially offset by lower marketing expenses in the current quarter.
Global Merchant and Network Services reported fourth-quarter pretax income of $691 million, compared with $475 million a year ago.
Total revenues net of interest expense were $1.8 billion, up 20 percent from $1.5 billion a year ago, primarily reflecting higher network volumes.
Total expenses were $1.1 billion, up 7 percent from $992 million a year ago, primarily reflecting higher compensation expenses.
Corporate and Other reported a fourth-quarter pretax loss of $638 million, compared with a pretax loss of $207 million a year ago. The higher loss was primarily driven by a prior-year non-cash gain related to an increase in the total equity book value of Global Business Travel Group, as well as a larger net loss on Amex Ventures investments in the current quarter.
_______________________
1 Diluted earnings per common share (EPS) was reduced by the impact of (i) earnings allocated to participating share awards and other items of $12 million and $11 million for the three months ended December 31, 2022 and 2021, respectively, and $57 million and $56 million for the years ended December 31, 2022 and 2021, respectively, (ii) dividends on preferred shares of $14 million and $22 million for the three months ended December 31, 2022 and 2021, respectively, and $57 million and $71 million for the years ended December 31, 2022 and 2021, respectively, and (iii) equity-related adjustments of $7 million and $16 million related to the redemption of preferred shares for the three months and year ended December 31, 2021, respectively.
As used in this release:
About American Express
American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, instagram.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: personal cards, business cards, travel services, gift cards, prepaid cards, merchant services, Accertify, Kabbage, Resy, corporate card, business travel, diversity and inclusion, corporate responsibility and Environmental, Social, and Governance reports.
Source: American Express Company
Location: Global
This earnings release should be read in conjunction with the company’s statistical tables for the fourth quarter 2022, available on the American Express Investor Relations website at http://ir.americanexpress.com and in a Form 8-K furnished today with the Securities and Exchange Commission.
An investor conference call will be held at 8:30 a.m. (ET) today to discuss fourth-quarter results. Live audio and presentation slides for the investor conference call will be available to the general public on the above-mentioned American Express Investor Relations website. A replay of the conference call will be available later today at the same website address.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address American Express Company’s current expectations regarding business and financial performance, including management’s outlook for 2023 and aspirations for 2024 and beyond, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “continue” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:
A further description of these uncertainties and other risks can be found in American Express Company’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2022 and the company’s other reports filed with the Securities and Exchange Commission.
Media:
Leah M. Gerstner, Leah.M.Gerstner@aexp.com, +1.212.640.3174
Andrew R. Johnson, Andrew.R.Johnson@aexp.com, +1.212.640.8610
Investors/Analysts:
Kerri S. Bernstein, Kerri.S.Bernstein@aexp.com, +1.212.640.5574
Michelle A. Scianni, Michelle.A.Scianni@aexp.com, +1.212.640.5574
Media:
Leah M. Gerstner, Leah.M.Gerstner@aexp.com, +1.212.640.3174
Andrew R. Johnson, Andrew.R.Johnson@aexp.com, +1.212.640.8610
Investors/Analysts:
Kerri S. Bernstein, Kerri.S.Bernstein@aexp.com, +1.212.640.5574
Michelle A. Scianni, Michelle.A.Scianni@aexp.com, +1.212.640.5574
