Third-quarter Earnings Per Share Increased 9% To $2.47
Card Member Spending Up 21%, Driven By Continued Momentum Across Goods & Services And Travel & Entertainment Spending
Credit Metrics Reflect Strength Of Premium Customer Base
NEW YORK–(BUSINESS WIRE)–American Express Company (NYSE: AXP) today reported third-quarter net income of $1.9 billion, or $2.47 per share, compared with net income of $1.8 billion, or $2.27 per share, a year ago.
($ in millions, except per share amounts, and where indicated)
Quarters Ended
September 30,
Percentage
Inc/(Dec)
Nine Months Ended
September 30,
Percentage
Inc/(Dec)
2022
2021
2022
2021
Total Network Volumes (Billions)
$394.4
$330.7
19
$1,139.5
$916.1
24
Total Revenues Net of Interest Expense
$13,556
$10,928
24
$38,686
$30,235
28
Total Provisions for Credit Losses
$778
$(191)
#
$1,155
$(1,472)
#
Net Income
$1,879
$1,826
3
$5,942
$6,341
(6)
Diluted Earnings Per Common Share1
$2.47
$2.27
9
$7.77
$7.82
(1)
Average Diluted Common Shares Outstanding
749
787
(5)
753
797
(6)
# – Denotes a variance of 100 percent or more.
“We had a strong third quarter with revenues growing 24 percent year-over-year, reaching a record high for the second quarter in a row,” said Stephen J. Squeri, Chairman and Chief Executive Officer.
“We continued to see high levels of customer engagement, acquisitions and loyalty across our premium Card Member base, with overall spending up 21 percent (24 percent on an FX-adjusted basis), driven by growth in both Goods & Services and Travel & Entertainment spending.
“The demand for travel has exceeded our expectations throughout the year, with spending on T&E increasing 57 percent from a year earlier and T&E spending volumes in our international markets surpassing pre-pandemic levels for the first time this quarter, both on an FX-adjusted basis.
“We continue to attract new, premium customers through our differentiated value propositions, experiences and services. We added 3.3 million proprietary cards in the quarter, and saw acquisitions of U.S. Consumer Platinum and Gold cards and U.S. Business Platinum cards each hit record highs. Millennials and Gen Z customers – our fastest growing demographic – are powering this growth and comprised more than 60 percent of our consumer proprietary card acquisitions in the quarter.
“Our credit metrics also remained strong even as we steadily rebuild loan balances, with delinquencies and write-offs continuing to be low. We have not seen changes in the spending behaviors of our customers, but we are mindful of the mixed signals in the broader economy and have plans in place to pivot should the operating environment change dramatically, as we have done in the past.
“The strength of our results, combined with the many opportunities we see for our business, reinforce our confidence in our ability to achieve our long-term growth plan aspirations.”
Third-quarter consolidated total revenues net of interest expense were $13.6 billion, up 24 percent from $10.9 billion a year ago. The increase was primarily driven by increased Card Member spending.
Consolidated provisions for credit losses were $778 million, compared with a benefit of $191 million a year ago. The change reflected a reserve build of $387 million, primarily driven by growth in Card Member loans and changes in macroeconomic forecasts, compared with a $393 million reserve release a year ago, as well as higher net write-offs in the current quarter. Credit metrics remained strong in the current quarter.
Consolidated expenses were $10.3 billion, up 19 percent from $8.7 billion a year ago. The increase primarily reflected higher customer engagement costs, driven by a 19 percent increase in network volumes and higher usage of travel-related benefits. Operating expenses also increased, primarily reflecting higher compensation costs, as well as a net loss on Amex Ventures investments in the current quarter compared with a net gain a year ago.
The consolidated effective tax rate was 23.6 percent, down from 25.5 percent a year ago, primarily reflecting changes in the geographic mix of pretax income.
Based on the company’s performance to date, it continues to expect full-year revenue growth of 23% to 25% and now expects to be above its original full-year EPS guidance range of $9.25 to $9.65.
Segment Results
As previously announced, effective for the third quarter of 2022, the company realigned its reportable operating segments to reflect organizational changes announced during the second quarter of 2022. Prior periods have been revised to conform to the new operating segments, which are as follows:
Corporate functions and certain other businesses and operations are included in Corporate and Other.
U.S. Consumer Services reported third-quarter pretax income of $1.31 billion, compared with $1.25 billion a year ago.
Total revenues net of interest expense were $6.2 billion, up 27 percent from $4.9 billion a year ago. The increase was primarily driven by increased Card Member spending.
Provisions for credit losses were $403 million, compared with a benefit of $119 million a year ago. The change reflected a reserve build of $203 million, compared with a $223 million reserve release a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $4.5 billion, up 20 percent from $3.8 billion a year ago, primarily reflecting higher customer engagement costs, which were driven by higher billed business and increased usage of travel-related benefits. Operating expenses also increased, primarily reflecting higher technology, servicing and compensation costs.
Commercial Services reported third-quarter pretax income of $774 million, compared with $699 million a year ago.
Total revenues net of interest expense were $3.5 billion, up 23 percent from $2.8 billion a year ago. The increase was primarily driven by increased Card Member spending.
Provisions for credit losses were $196 million, compared with a benefit of $67 million a year ago. The change reflected a reserve build of $106 million, compared with a $94 million reserve release a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $2.5 billion, up 14 percent from $2.2 billion a year ago, primarily reflecting higher customer engagement costs, which were driven by higher network volumes.
International Card Services reported third-quarter pretax income of $166 million, compared with $269 million a year ago. Results for this segment were significantly impacted by the strength of the U.S. dollar during the quarter.
Total revenues net of interest expense were $2.3 billion, up 19 percent (34 percent FX-adjusted) from $1.9 billion a year ago. The increase was primarily driven by increased Card Member spending and foreign exchange conversion fee revenue.
Provisions for credit losses were $176 million, compared with a benefit of $6 million a year ago. The change reflected a reserve build of $77 million, compared with a $69 million reserve release a year ago, as well as higher net write-offs in the current quarter.
Total expenses were $1.9 billion, up 17 percent from $1.6 billion a year ago, primarily reflecting higher customer engagement costs, which were driven by higher network volumes and increased usage of travel-related benefits. Operating expenses also increased, primarily reflecting higher technology, servicing and compensation costs.
Global Merchant and Network Services reported third-quarter pretax income of $792 million, compared with $513 million a year ago.
Total revenues net of interest expense were $1.7 billion, up 26 percent from $1.3 billion a year ago, primarily reflecting an increase in network volumes.
Total expenses were $870 million, up 8 percent from $809 million a year ago, primarily reflecting higher network volumes in the current quarter and a release of reserves in the prior year for merchant exposure associated with Card Member travel-related purchases earlier in the COVID-19 pandemic.
Corporate and Other reported a third-quarter pretax loss of $582 million, compared with a pretax loss of $282 million a year ago. The decline was primarily driven by a net loss on Amex Ventures investments in the current quarter compared with a net gain a year ago.
____________________
1 Diluted earnings per common share (EPS) was reduced by the impact of (i) earnings allocated to participating share awards and other items of $14 million for both the three months ended September 30, 2022 and 2021, and $45 million for both the nine months ended September 30, 2022 and 2021, (ii) dividends on preferred shares of $14 million and $20 million for the three months ended September 30, 2022 and 2021, respectively, and $43 million and $49 million for the nine months ended September 30, 2022 and 2021, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for both the three months and nine months ended September 30, 2021.
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 third 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 third-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 2022, expectations 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 and June 30, 2022 and the company’s other reports filed with the Securities and Exchange Commission.
Media Contacts:
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 Contacts:
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 Contacts:
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 Contacts:
Kerri S. Bernstein, Kerri.S.Bernstein@aexp.com, +1.212.640.5574
Michelle A. Scianni, Michelle.A.Scianni@aexp.com, +1.212.640.5574
