American Express Reports Better-Than-Expected Quarterly Results as Card Users Raise Spending

9:29 AM, Oct 18, 2019 — American Express (AXP) reported third-quarter results that were ahead of analysts’ expectations, as the payments processor and credit-card company saw higher fees and increased spending by its members.

Adjusted earnings rose to $2.08 a share compared with $1.88 a share in the same period of 2018, while the consensus on Capital IQ was for $2.02 a share. Revenue rose 8% to $10.99 billion, while the Street was looking for $10.94 billion.

“I’m pleased with the breadth and consistency of our revenue growth, driven by a well-balanced mix of card member spending, loans and membership revenues from our fee-based products, which grew 19% and exceeded $1 billion this quarter for the first time,” said Steve Squeri, the company’s chief executive.

He said card user spending was up 7% and the loan portfolio grew 9%, “with over 60% of that growth again coming from existing card members.”

Provision for credit losses rose 8% to $879 million because of higher net write-offs and delinquencies. Expenses rose 9% to $7.8 billion as the company spent more on customer engagement including rewards.

Global consumer services group revenue rose 11% to $6 billion amid the higher spending by consumers, as well as card fees and increases in net interest income. Merchant and net services revenue rose 5% to $1.7 billion, also attributed to increased card member spending.

American Express said it expects revenue growth for the current three-month period of 8% to 10%, and affirmed guidance for full-year earnings per share of between $7.85 to $8.35 on an adjusted basis. The Street expects $8.10 a share.

“The trends we saw in the business this quarter continue to be consistent with an economy that continues to grow, albeit at a more modest pace than last year,” Squeri said.

Companies: American Express Company
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