Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

American Express Reports Third-Quarter Revenue of $10.9 Billion and Earnings Per Share Of $2.27


American Express Company (NYSE: AXP) today reported third-quarter net income of $1.8 billion, or $2.27 per share, compared with net income of $1.1 billion, or $1.30 per share, a year ago.

 

(Millions, except percentages and per share amounts)

Quarters Ended
September 30,

Percentage
Inc/(Dec)

Nine Months Ended
September 30,

Percentage
Inc/(Dec)

 

2021

 

2020

 

2021

 

2020

Total Revenues Net of Interest Expense

$

10,928

$

8,751

25

$

30,235

$

26,736

13

Total Provisions for Credit Losses

$

(191)

$

665

#

$

(1,472)

$

4,841

#

Net Income

$

1,826

$

1,073

70

$

6,341

$

1,697

#

Diluted Earnings Per Common Share1

$

2.27

$

1.30

75

$

7.82

$

2.01

#

Average Diluted Common Shares Outstanding

 

787

 

805

(2)

 

797

 

806

(1)

# - Denotes a variance of 100 percent or more.

"Our strong third quarter results once again reflect accelerating momentum in our core business and outstanding credit performance, enabled by the strategic decisions we've made over the last several years," said Stephen J. Squeri, Chairman and Chief Executive Officer.

"Revenues jumped 25% from a year ago and Card Member spending accelerated from the previous quarter, reaching record highs for the third quarter. The growth was powered by consumer and small business spending on goods and services, which grew 19% over Q3 2019 on an FX-adjusted basis. We also saw a continued rebound in travel and entertainment spending, with restaurant spending notably resilient, growing above pre-pandemic levels in the quarter.

"The strategic investments we've made over the past year, particularly those to attract new Millennial and Gen Z customers and expand our leadership position with small businesses, are helping fuel the strong momentum we're seeing in spending, customer acquisition, engagement, and retention. Spending by Millennial and Gen Z Card Members grew 38% above Q3 2019 levels on an FX-adjusted basis. We acquired 2.6 million new proprietary cards in Q3, with acquisitions of our U.S. consumer and small business Platinum and Gold Cards reaching all-time highs while our Card Member retention and satisfaction metrics are better than pre-pandemic levels.

"We're operating from a position of strength, and we see more opportunity ahead to drive sustainable, long-term growth. With the progress we've made against our key priorities this year, we remain confident in our ability to be within the high end of the range of the EPS expectations we had for 2020 in 2022."

Third-quarter consolidated total revenues net of interest expense were $10.9 billion, up 25 percent from $8.8 billion a year ago. The quarter primarily reflected growth in Card Member spending, as well as a rise in the average discount rate resulting from the change in the mix of spending driven by increased levels of travel and entertainment spending, compared to the prior year.

Consolidated provisions for credit losses resulted in a benefit of $191 million, compared with a provision expense of $665 million a year ago. The change in provisions primarily reflected credit reserve releases of $393 million and lower net write-offs in the current quarter.

Consolidated expenses were $8.7 billion, up 29 percent from $6.7 billion a year ago, reflecting higher customer engagement costs. Customer engagement costs were up due to an increase in Card Member spending, higher marketing investments to continue building growth momentum, and higher usage of travel-related Card Member benefits. Operating expenses were slightly higher as a result of increased salary and benefits, partially offset by gains related to certain Amex Ventures equity investments.

The consolidated effective tax rate was 25.5 percent, up from 21.3 percent a year ago. The increase primarily reflected changes in the level and geographic mix of pretax income and discrete tax charges in the current quarter.

Global Consumer Services Group reported third-quarter pretax income of $1.5 billion, compared with $1.1 billion a year ago.

Total revenues net of interest expense were $6.4 billion, up 21 percent from $5.3 billion a year ago. The rise primarily reflected an increase in Card Member spending compared to the prior year.

Provisions for credit losses resulted in a benefit of $126 million, primarily reflecting a portion of the previously mentioned reserve releases and lower net write-offs, compared with a provision expense of $411 million a year ago.

Total expenses were $5.0 billion, up 34 percent from $3.8 billion a year ago. The increase primarily reflected higher customer engagement costs due to a rise in Card Member spending, higher marketing investments to continue building growth momentum, and higher usage of travel-related Card Member benefits.

Global Commercial Services reported third-quarter pretax income of $718 million, compared with $272 million a year ago.

Total revenues net of interest expense were $3.2 billion, up 28 percent from $2.5 billion a year ago, primarily reflecting a rise in Card Member spending.

Provisions for credit losses resulted in a benefit of $67 million, primarily reflecting a portion of the previously mentioned reserve releases and lower net write-offs, compared with a provision expense of $250 million a year ago.

Total expenses were $2.6 billion, up 29 percent from $2.0 billion a year ago. The increase primarily reflected higher customer engagement costs due to a rise in Card Member spending and higher marketing investments to continue building growth momentum.

Global Merchant and Network Services reported third-quarter pretax income of $529 million, compared with $326 million a year ago.

Total revenues net of interest expense were $1.3 billion, up 28 percent from $1.0 billion a year ago. The rise reflected an increase in network volumes compared to the prior year.

Total expenses were $779 million, up 13 percent from $691 million a year ago, driven by higher marketing investments.

Corporate and Other reported a third-quarter pretax loss of $285 million, compared with a pretax loss of $359 million a year ago.

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 2021, 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, among other matters, contain words such as "believe," "expect," "anticipate," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely" 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, 2020, the Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2021 and the company's other reports filed with the Securities and Exchange Commission.

Notes:

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 and $7 million for the three months ended September 30, 2021 and 2020, respectively, and $45 million and $10 million for the nine months ended September 30, 2021 and 2020, respectively, and (ii) dividends on preferred shares of $20 million and $16 million for the three months ended September 30, 2021 and 2020, respectively, and $49 million and $65 million for the nine months ended September 30, 2021 and 2020, respectively, and (iii) an equity-related adjustment of $9 million related to the redemption of preferred shares for the three and nine months ended September 30, 2021.

As used in this release:

 


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