American Express Reports Second-Quarter Earnings Per Share Of $2.07

Strong Revenue Growth Reflects Higher Card Member Spending, Loans and Card Fees

Company Reaffirms 2019 Outlook

American Express Company (NYSE: AXP) today reported second-quarter net income of $1.8 billion, up 9 percent from $1.6 billion a year ago. Diluted earnings per share was $2.07, up 13 percent from $1.84 per share a year ago.

(Millions, except percentages and per share amounts)

Quarters Ended

June 30,

Percentage
Inc/(Dec)

Six Months Ended June
30,

Percentage
Inc/(Dec)

2019

2018

2019

2018

Total Revenues Net of Interest Expense

$

10,838

$

10,002

8

$

21,202

$

19,720

8

Net Income

$

1,761

$

1,623

9

$

3,311

$

3,257

2

Diluted Earnings Per Common Share1

$

2.07

$

1.84

13

$

3.87

$

3.70

5

Adjusted Diluted Earnings Per Common Share2

$

2.07

$

1.84

13

$

4.07

$

3.70

10

Average Diluted Common Shares Outstanding

 

836

 

862

(3)

 

839

 

862

(3)

Second-quarter consolidated total revenues net of interest expense were $10.8 billion, up 8 percent from $10.0 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10 percent.3 The increases reflected higher Card Member spending, loans and card fees.

Consolidated provisions for losses were $861 million, up 7 percent from $806 million a year ago. The increase reflected higher net lending write-offs driven by loan growth.

Consolidated expenses were $7.8 billion, up 9 percent from $7.1 billion a year ago. The rise reflected, in part, growth in rewards and other customer engagement costs driven by increased Card Member spending, higher usage of card benefits and continued investments in cobrand partnerships. Operating expenses were up 7 percent from a year ago.4

The consolidated effective tax rate was 21 percent, down from 22 percent a year ago.

“We continued the broad-based momentum throughout our business with the eighth straight quarter of FX-adjusted revenue growth at 8 percent or better,” said Steve Squeri, chairman and chief executive officer. “Once again, our performance was driven by a well-balanced mix of spending volumes, lending income and card fees.

“FX-adjusted Card Member spending was up 7 percent, led by consumers. This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018. Total loans grew 11 percent, with over 60 percent of that increase coming from our existing customers. Credit performance continued at industry-leading levels.

“We continued to enhance the benefits and services we offer and that helped us add 2.9 million new proprietary cards this quarter. Nearly 70 percent of those new consumer cards we acquired this quarter carry an annual fee – a strong sign that Card Members appreciate and are willing to pay for premium value.

“I feel very good about the power of our business model and our returns on the investments we’ve been making to drive share, scale and relevance. Given this quarter’s solid results, and all that we’ve achieved during the first half of the year, we are reaffirming our 2019 financial guidance of 8 to 10 percent revenue growth and full-year results that are in line with our EPS range.5

The company also plans to continue returning a significant portion of the capital it generates to shareholders and expects to increase the regular quarterly dividend on its common shares outstanding to 43 cents per share from 39 cents beginning with the third quarter 2019, subject to approval by the company’s board of directors.

Global Consumer Services Group reported second-quarter net income of $738 million, down 4 percent from $770 million a year ago.

Total revenues net of interest expense were $5.8 billion, up 10 percent from $5.3 billion a year ago. The rise primarily reflected higher loans, Card Member spending and card fees.

Provisions for losses totaled $650 million, up 15 percent from $565 million a year ago. The increase reflected higher net lending write-offs driven by loan growth.

Total expenses were $4.3 billion, up 13 percent from $3.8 billion a year ago. The rise reflected, in part, growth in rewards expenses and other customer engagement costs driven by increased Card Member spending, higher usage of card benefits and continued investments in cobrand partnerships.

The effective tax rate was 19 percent, down from 20 percent a year ago.

Global Commercial Services reported second-quarter net income of $644 million, up 14 percent from $564 million a year ago.

Total revenues net of interest expense were $3.4 billion, up 7 percent from $3.2 billion a year ago. The increase primarily reflected higher Card Member spending.

Provisions for losses totaled $206 million, down 12 percent from $235 million a year ago. The decrease reflected higher net losses in the prior year, largely in the charge card portfolio, partially offset by growth in loans and receivables.

Total expenses were $2.4 billion, up 7 percent from $2.2 billion a year ago. The rise reflected, in part, growth in rewards expenses and other customer engagement costs driven by increased Card Member spending, higher usage of card benefits and continued investments in cobrand partnerships.

The effective tax rate was 20 percent, down from 21 percent a year ago.

Global Merchant and Network Services reported second-quarter net income of $632 million, up 16 percent from $543 million a year ago.

Total revenues net of interest expense were $1.7 billion, up 5 percent from $1.6 billion a year ago. The increase reflected higher worldwide Card Member spending.

Total expenses were $823 million, down 2 percent from $838 million a year ago.

The effective tax rate was 25 percent, down from 27 percent a year ago.

Corporate and Other reported second-quarter net loss of $253 million, unchanged from a year ago.

________________________

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 $13 million and $12 million for the three months ended June 30, 2019 and 2018, respectively, and $24 million and $25 million for the six months ended June 30, 2019 and 2018, respectively, and (ii) dividends on preferred shares of $19 million and $20 million for the three months ended June 30, 2019 and 2018, respectively, and $40 million and $41 million for the six months ended June 30, 2019 and 2018, respectively.
  2. Adjusted diluted earnings per common share, a non-GAAP measure, excludes the impact of a litigation-related charge in Q1‘19. See Appendix I for a reconciliation to EPS on a GAAP basis. Management believes adjusted EPS is useful in evaluating the ongoing operating performance of the company.
  3. As reported in this release, FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (e.g., assumes the foreign exchange rates used to determine results for the three months ended June 30, 2019 apply to the period(s) against which such results are being compared). Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. FX-adjusted revenues constitute non-GAAP measures.
  4. Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, and other expenses.
  5. The company's 2019 EPS guidance on a GAAP basis, which includes the impact of a litigation-related charge in Q1'19, is between $7.64 and $8.14. The 2019 adjusted EPS guidance, a non-GAAP measure, is between $7.85 and $8.35. See Appendix I for a reconciliation. Management believes the presentation of adjusted EPS guidance is useful in evaluating the ongoing operating performance of the company.

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: charge and credit cards, business credit cards, travel services, gift cards, prepaid cards, merchant services, Accertify, InAuth, corporate card, business travel, and corporate responsibility.

This earnings release should be read in conjunction with the company’s statistical tables for the second quarter 2019, available on the American Express 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 second-quarter earnings 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, including management’s outlook for 2019, among other matters, contain words such as “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, 2018, the company’s Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2019 and the company’s other reports filed with the Securities and Exchange Commission.

 

American Express Company

 

Appendix I

 

 

 

Reconciliations of Adjustments

 

 

 

 

 

 

 

 

 

 

 

Q2'19

YTD

Q2’18
YTD

Percentage
Inc/(Dec)

 

Diluted earnings per common share

 

$3.87

$3.70

 

5

 

Litigation-related charge (pre-tax)

 

0.26

 

 

Tax impact of litigation-related charge

 

(0.06)

 

 

Net Impact of Q1’19 litigation-related charge(a)

 

0.20

 

 

Adjusted diluted earnings per common share

 

$4.07

$3.70

10

 

 

 

 

 

2019 EPS Range

 

GAAP EPS Outlook

 

$7.64

$8.14

 

Litigation-related charge (pre-tax)

 

0.27

0.27

 

Tax impact of litigation-related charge

 

(0.06)

(0.06)

 

Net Impact of Q1’19 litigation-related charge(a)

 

0.21

0.21

 

Adjusted EPS Outlook

 

$7.85

$8.35

 

a The difference between the net impact of the Q1’19 litigation-related charge on Q2’19 YTD EPS and the 2019 GAAP EPS Outlook is due to the average common shares outstanding for each respective period.

Media:
Marina H. Norville, marina.h.norville@aexp.com, +1.212.640.2832

Investors/Analysts:
Rosie C. Perez, rosario.c.perez@aexp.com, +1.212.640.5574
Melanie L. Michel, melanie.l.michel@aexp.com, +1.212.640.5574