Financials
Credit Services
$206.46B
74.6K
American Express is a globally integrated payments company, offering credit and charge cards to consumers, small businesses, and large corporations. The company operates its own network, enabling direct relationships with both card members and merchants, which provides unique data insights and competitive advantages. American Express has a significant presence in key markets such as the United States, the United Kingdom, and other parts of Europe, as well as Australia, Japan, Canada and Mexico.
Key insights and themes extracted from this filing
Total revenues net of interest expense increased by 11% year-over-year, driven by a 6% increase in billed business and a 26% increase in net interest income. Discount revenue, the largest revenue line, increased by 5%.
Net income increased by 34% year-over-year, reaching $2.4 billion, or $3.33 per share, compared to $1.8 billion, or $2.40 per share, a year ago. The effective tax rate increased from 16.2% to 22.5%, primarily due to discrete tax benefits in the prior period.
Provisions for credit losses increased by 20% year-over-year, primarily driven by higher net write-offs, partially offset by a lower net reserve build in the current year. Net write-off and delinquency rates remain best-in-class.
Billed business increased by 6% year-over-year, with U.S. Consumer Services growing by 8% and International Card Services growing by 11%. Commercial Services grew by 2%.
The company acquired 3.4 million proprietary new cards during the quarter, indicating continued success in attracting new customers. Net card fees increased 15% year-over-year, reflecting high levels of new card acquisition and Card Member retention.
The company signed an agreement to sell Accertify Inc., a wholly-owned subsidiary, with the transaction expected to close in the second quarter of 2024. Upon closing, the company expects to recognize a sizeable pre-tax gain, which will be reinvested back into the business.
The company maintained its capital ratios within the target range of 10 to 11 percent and returned $1.6 billion of capital to shareholders through share repurchases and dividends. The company also increased its quarterly common stock dividend by 17%.
Operating expenses were flat year-over-year, as higher compensation costs were offset by net losses on Amex Ventures investments in the prior year. The company remains focused on driving marketing and operating expense efficiencies over time.
Marketing expense increased by 10% year-over-year, as the company continues to invest in acquiring high-spending, high-quality customers and other growth initiatives. The company is also investing in technology capabilities and its brand.
The company acknowledges the uncertainty of the geopolitical and macroeconomic environment and the evolving regulatory and competitive landscape. These factors could have a material adverse effect on the company's results of operations and financial condition.
The company is subject to extensive government regulation and supervision, and the costs of compliance are substantial. The development and enforcement of new laws and regulations may increase operational complexity and compliance costs.
The company's consumer-oriented activities are subject to regulation and supervision in the United States and internationally. The CFPB issued a final rule that lowers the safe harbor amount for credit card late fees, which could impact delinquency fee revenue.
Net card fees increased by 15% year-over-year, primarily driven by growth in the company's premium card portfolios. The company continues to focus on attracting and retaining high-spending, high-quality customers.
The company achieved market share gains in key segments, particularly in the U.S. Consumer Services segment, despite intense competition from other payment networks and financial institutions. The company's differentiated business model and premium customer base are key advantages.
The company acknowledges that surcharging and other steering or differential acceptance practices that are permitted by regulation in some jurisdictions could have a material adverse effect on the company, particularly where it only or disproportionately impacts credit card usage.
Operating expenses were flat year-over-year, reflecting higher compensation costs offset by net losses on Amex Ventures investments in the prior period. The company remains focused on driving expense efficiencies over time.
The company is investing in technology and digital capabilities to automate processes and enhance customer interactions. This is expected to improve operational efficiency and reduce costs over time.
The company is monitoring supply chain issues and fraud costs, which could impact operating expenses. The company is also focused on managing these costs through various initiatives.
The company is investing in technology capabilities to enhance its products and services, improve customer experience, and drive operational efficiencies. This includes investments in digital payment solutions, AI, and machine learning.
The company is focused on evolving its products and processes for the digital environment, developing new features in the Amex app, and enhancing its digital channels. This is expected to improve customer engagement and drive growth.
The company is leveraging data analytics and insights to better understand customer behavior and preferences. This is expected to enable the company to develop more targeted products and services and improve customer loyalty.
The company returned $1.6 billion of capital to shareholders through share repurchases and common stock dividends. The company also increased its quarterly common stock dividend by 17%.
The company maintained its capital ratios within the target range of 10 to 11 percent, indicating a strong capital position. The company is focused on managing its capital levels to support future business growth and return capital to shareholders.
The company maintains flexibility to shift capital across its businesses as appropriate, which may include infusing additional capital into subsidiaries to maintain capital at targeted levels.
The company is committed to implementing its ESG strategies and initiatives, which include investments in product innovations, marketing campaigns, supply chain and operations, and philanthropic, colleague and community programs. The company is also focused on addressing customer preferences and behaviors and the cost and availability of solutions for a low carbon economy.
The company is focused on promoting diversity and inclusion in its workforce and operations. This is expected to improve the company's ability to attract and retain talent and better serve its diverse customer base.
The company is committed to complying with ethical and governance standards and maintaining a strong risk management framework. This is expected to protect the company's reputation and ensure long-term sustainability.
The company acknowledges the uncertainty of the geopolitical and macroeconomic environment, including recession risks, changes in interest rates, effects of inflation, labor shortages, supply chain issues, energy costs, and the ongoing wars in Ukraine and Israel. These factors could impact the company's results of operations and financial condition.
The company is subject to extensive government regulation and supervision, and the costs of compliance are substantial. The development and enforcement of new laws and regulations may increase operational complexity and compliance costs.
The company faces substantial and increasing worldwide competition in the payments industry, including competitive pressure and competitor settlements and mergers. This could impact the prices charged to merchants, the desirability of the company's products, and the company's ability to attract and retain customers.