Summary

  • American Express is a globally integrated payment company.
  • It's a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world.
  • American Express operating in over 110 countries with 55 total office locations worldwide

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American Express (NYSE: AXP, LSE: 0R3C) is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. American Express is a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world.

Recent Developments

American Express Opens 14,000 Square Foot Centurion® Lounge in New Location at Seattle-Tacoma International Airport1

February 15, 2023; Today American Express opened a new, 14,000 square foot Centurion Lounge at Seattle-Tacoma International Airport (SEA). The new lounge is nearly triple the size of the original Centurion Lounge at SEA and now located in the newly created mezzanine level of the Central Terminal post-security. It features spectacular views of the airfield and iconic Olympic mountains, ample room for guests to relax or work before their flight, and a locally-inspired menu from Seattle-based Communion Restaurant and Bar Executive Chef Kristi Brown. Plus, the new location includes “Blue Roast by American Express,” a coffee bar serving specialty coffee, espresso drinks, and cold brew from local Seattle roaster Caffè Umbria, and a one-of-a-kind mural of the Seattle skyline made from coffee beans by celebrated artist Harold Caudio.

The Centurion Lounge at SEA honors Seattle’s coffee culture with “Blue Roast by American Express,” the first full-service coffee bar with counter service located in a Centurion Lounge. Baristas will serve espresso beverages, cold brew, and rotating seasonal specialty coffee drinks from local Seattle roaster Caffè Umbria. The wellness-themed café menu features healthy bites, made-to-order fruit smoothies, and kombucha on tap.

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Financial Highlights

For 2022, the company reported net income of $7.5 billion, or $9.85 per share, compared with net income of $8.1 billion, or $10.02 per share, a year ago. The reduction in net income reflected credit reserve builds and net losses in its Amex Ventures strategic investment portfolio in the current year compared with sizeable credit reserve releases and significant net gains in its Amex Ventures strategic investment portfolio in the prior year.2

Consolidated total revenues net of interest expense for the full year were $52.9 billion, up 25 percent from $42.4 billion a year ago. The increase primarily reflected growth in Card Member spending compared to the prior year.

Consolidated provisions for credit losses for the full year were $2.2 billion, compared with a benefit of $1.4 billion a year ago. The change reflected a reserve build of $617 million, compared with a reserve release of $2.5 billion in the prior year. Credit metrics remained strong throughout the year and below pre-pandemic levels.

Consolidated expenses for the full year were $41.1 billion, up 24 percent from $33.1 billion a year ago, primarily reflecting higher customer engagement costs driven by higher network volumes and increased usage of travel-related benefits throughout the year. Operating expenses also increased, primarily reflecting net losses of $302 million related to Amex Ventures investments in the current year compared with net gains of $767 million in the prior year, as well as higher compensation costs in the current year.

Fourth-Quarter 2022 Results

For the fourth quarter of 2022, the company reported net income of $1.6 billion, or $2.07 per share, compared with net income of $1.7 billion, or $2.18 per share, a year ago.3

Fourth-quarter consolidated total revenues net of interest expense were $14.2 billion, up 17 percent from $12.1 billion a year ago. The increase was primarily driven by increased Card Member spending, as well as higher net interest income, reflecting higher average loan volumes.

Consolidated provisions for credit losses were $1.0 billion, compared with $53 million a year ago. The increase reflected a reserve build of $492 million, compared with a net reserve release of $168 million a year ago, as well as higher net write-offs in the current quarter. Credit metrics remained strong in the current quarter and below pre-pandemic levels.

Consolidated expenses were $11.3 billion, up 15 percent from $9.8 billion a year ago. The increase primarily reflected higher customer engagement costs, driven by higher network volumes and increased usage of travel-related benefits, and was partially offset by lower marketing expenses in the current quarter. Operating expenses also increased, primarily reflecting higher compensation costs and a net loss on Amex Ventures investments of $234 million in the quarter.

The consolidated effective tax rate was 16.0 percent, down from 25.5 percent a year ago, primarily reflecting discrete tax benefits related to the resolution of prior-year tax items in the current quarter.

U.S. Consumer Services reported fourth-quarter pretax income of $1.3 billion, flat with the prior year.

Total revenues net of interest expense were $6.5 billion, up 23 percent from $5.3 billion a year ago. The increase was primarily driven by higher net interest income, reflecting higher average loan volumes, and increased Card Member spending.

Provisions for credit losses were $542 million, compared with a benefit of $9 million a year ago. The increase reflected a reserve build of $269 million, compared with a net reserve release of $133 million a year ago, as well as higher net write-offs in the current quarter.

Total expenses were $4.7 billion, up 17 percent from $4.0 billion a year ago, primarily reflecting higher customer engagement costs, which were driven by higher network volumes and increased usage of travel-related benefits, and partially offset by lower marketing expenses in the current quarter.

Commercial Services reported fourth-quarter pretax income of $547 million, compared with $717 million a year ago.

Total revenues net of interest expense were $3.6 billion, up 15 percent from $3.1 billion a year ago. The increase was primarily driven by increased Card Member spending.

Provisions for credit losses were $271 million, compared with $9 million a year ago. The increase reflected a reserve build of $135 million, compared with a net reserve release of $29 million a year ago, as well as higher net write-offs in the current quarter.

Total expenses were $2.7 billion, up 16 percent from $2.4 billion a year ago, primarily reflecting higher customer engagement costs, driven by higher network volumes.

International Card Services reported a fourth-quarter pretax loss of $15 million, compared with pretax income of $40 million a year ago. Results for this segment were significantly impacted by the strengthening of the U.S. dollar.

Total revenues net of interest expense were $2.4 billion, up 14 percent (25 percent FX-adjusted) from $2.1 billion a year ago. The increase was primarily driven by increased Card Member spending and foreign exchange-related revenue.

Provisions for credit losses were $210 million, compared with $53 million a year ago. The increase reflected a reserve build of $87 million, compared with a net reserve build of $3 million a year ago, as well as higher net write-offs in the current quarter.

Total expenses were $2.2 billion, up 10 percent from $2.0 billion a year ago, primarily reflecting higher customer engagement costs and increased compensation expenses. The increase in customer engagement costs was driven by higher network volumes and increased usage of travel-related benefits, and partially offset by lower marketing expenses in the current quarter.

Global Merchant and Network Services reported fourth-quarter pretax income of $691 million, compared with $475 million a year ago.

Total revenues net of interest expense were $1.8 billion, up 20 percent from $1.5 billion a year ago, primarily reflecting higher network volumes.

Total expenses were $1.1 billion, up 7 percent from $992 million a year ago, primarily reflecting higher compensation expenses.

Corporate and Other reported a fourth-quarter pretax loss of $638 million, compared with a pretax loss of $207 million a year ago. The higher loss was primarily driven by a prior-year non-cash gain related to an increase in the total equity book value of Global Business Travel Group, as well as a larger net loss on Amex Ventures investments in the current quarter.

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Company Overview

American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. American Express is a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world. American Express cards issued by it, as well as by third-party banks and other institutions on the American Express network, can be used by Card Members to charge purchases at the millions of merchants around the world that accept cards bearing its logo.

American Express was founded in 1850 as a joint stock association and were incorporated in 1965 as a New York corporation. American Express Company and its principal operating subsidiary, American Express Travel Related Services Company, Inc. (TRS), are bank holding companies under the Bank Holding Company Act of 1956, as amended (the BHC Act), subject to supervision and examination by the Board of Governors of the Federal Reserve System (the Federal Reserve).

Products & Services

  • Credit Cards
  • Business Credit Cards
  • Corporate Programs
  • Prepaid Cards
  • Savings Accounts & CDs
  • Gift Cards

Global Network

The company has global coverage.4

Asia PacificEuropeUS & CanadaLatin America
Auckland, NZAmsterdam, NLAtlanta, USBuenos Aires, Argentina
Bangalore, INBrighton, UKItasca, USMexico City, Mexico
Bangkok, THBrussels, BLNew York, US 
Chennai, INBurgess Hill, UKPalo Alto, US 
Gurgaon, INFrankfurt am Main, DEPhoenix, US 
Hong Kong SAR, CNLondon, UKsalt Lake City, US 
Hyderabad, INMadrid, ESSunrise, US 
Kuala Lumpur, MYMilan, ITToronto, CA 
Manila, PHMoscow, RU  
Melbourne, AURome, IT  
Mumbai, INRueil Malmaison, FR  
New Delhi, INStockholm, Sweden  
Osaka, JPWarsaw, Poland  
Shanghai, CNVienna, Austria  
Singapore, SG   
Sydney, AU   
Taipei City, TW   
Tokyo, JP   

References

  1. ^ https://about.americanexpress.com/newsroom/press-releases/news-details/2023/American-Express-Opens-14000-Square-Foot-Centurion-Lounge-in-New-Location-at-Seattle-Tacoma-International-Airport/default.aspx
  2. ^ https://fintel.io/doc/sec-american-express-co-4962-10k-2023-february-10-19398-8201
  3. ^ https://ir.americanexpress.com/news/investor-relations-news/investor-relations-news-details/2023/American-Express-Delivers-on-2022-Growth-Plan-With-Full-Year-Revenue-Growth-of-25-and-Earnings-Per-Share-of-9.85/default.aspx
  4. ^ https://www.americanexpress.com/en-us/careers/locations/index.html/
Created by Asif Farooqui on 2023/02/20 08:30
     
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