October 18, 2018 NEW YORK
American Express Company (NYSE: AXP) today reported third-quarter net income of $1.7 billion, up 22 percent from $1.4 billion a year ago. Diluted earnings per share was $1.88, up 25 percent from $1.51 per share a year ago.
Third-quarter consolidated total revenues net of interest expense were a record $10.1 billion, up 9 percent from $9.3 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10 percent.2 The increase reflected higher spending by consumer, small business, and corporate Card Members, as well as higher loan volumes and fee income.
Consolidated provisions for losses were $817 million, up 6 percent from $770 million a year ago. The increase reflected growth in the loan portfolio and a higher lending write-off rate, moderated by stable delinquency rates.
Consolidated expenses were $7.2 billion, up 8 percent from $6.7 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs. Operating expenses declined 1 percent from the year-ago period, which included charges related to the company’s U.S. Loyalty Coalition and Prepaid businesses.3
The consolidated effective tax rate was 22 percent, down from 26 percent a year ago. For consolidated results and all segments, the current quarter reflected the reduction in the U.S. federal statutory tax rate as a result of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). The company continues to analyze the Tax Act provisional charge recorded in the fourth quarter of 2017 along with potential recognition of certain unrecognized tax benefits and other discrete tax items. Certain events that impact the timing and amounts of these tax matters have not yet occurred or are out of the company’s control and therefore are excluded from the company’s full-year 2018 adjusted EPS outlook referenced below and a reconciliation to 2018 EPS outlook on a GAAP basis is unavailable.4
“We delivered strong results this quarter driven by higher Card Member spending, fee income and loans,” said Stephen J. Squeri, chairman and chief executive officer. “Our progress reflects the four strategic imperatives that we’re focused on:
- Expand leadership in the premium consumer space
- Build on our strong position in commercial payments
- Strengthen our global integrated network to provide unique value
- Make American Express an essential part of our customers’ digital lives.”
“Revenues rose 9 percent (10 percent FX-adjusted2), reflecting very good performance across our businesses, customer segments and geographies. Card Member spending was up 8 percent (10 percent FX-adjusted). Credit indicators remained strong. Operating expenses were well controlled.
“We continued to expand our merchant network, acquired 3.0 million new cards and strengthened our relationships with existing customers.
“This marks our sixth consecutive quarter of strong adjusted revenue growth and our investments in new benefits, services and digital capabilities continued to generate momentum as we enter the latter part of 2018.
“Given that momentum, we now expect full-year 2018 revenues to be up 9 to 10 percent and adjusted EPS to be $7.30 to $7.40, up from the $6.90 to $7.30 range we set at the start of the year.”4
Global Consumer Services Group reported third-quarter net income of $779 million, up 15 percent from $680 million a year ago.
Total revenues net of interest expense were $5.4 billion, up 11 percent from $4.9 billion a year ago. The rise primarily reflected higher loans, Card Member spending, and fee income.
Provisions for losses totaled $609 million, up 7 percent from $568 million a year ago. The rise primarily reflected growth in the loan portfolio and an increase in the lending write-off rate, moderated by stable delinquency rates.
Total expenses were $3.8 billion, up 13 percent from $3.4 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs.
The effective tax rate was 20 percent, down from 26 percent a year ago.
Global Commercial Services reported third-quarter net income of $606 million, up 20 percent from $505 million a year ago.
Total revenues net of interest expense were $3.2 billion, up 9 percent from $2.9 billion a year ago. The increase primarily reflected higher Card Member spending.
Provisions for losses totaled $201 million, up 3 percent from $195 million a year ago.
Total expenses were $2.2 billion, up 10 percent from $2.0 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs.
The effective tax rate was 22 percent, down from 31 percent a year ago.
Global Merchant and Network Services reported third-quarter net income of $580 million, up 38 percent from $420 million a year ago.
Total revenues net of interest expense were $1.6 billion, up 2 percent from $1.5 billion a year ago. The increase primarily reflected higher Card Member spending, partially offset by a decrease in the average discount rate, and lower revenues from network partners.
Total expenses were $807 million, down 17 percent from $977 million a year ago. The year-ago quarter included the previously-mentioned U.S. Loyalty Coalition and Prepaid charges.
The effective tax rate was 24 percent, down from 25 percent a year ago.
Corporate and Other reported third-quarter net loss of $311 million compared with net loss of $246 million a year ago.
