First-Quarter Earnings
Per Share Was $2.73
Company Reaffirms 2022
Revenue and EPS Guidance
American Express Company (NYSE: AXP) today reported
first-quarter net income of $2.1 billion, or $2.73 per share,
compared with net income of $2.2 billion, or $2.74 per share, a
year ago.
($ in millions, except per share
amounts, and where indicated)
Quarters Ended March
31,
Percentage Inc/(Dec)
2022
2021
Total Network Volumes (Billions)
$
350.3
$
269.3
30%
Total Revenues Net of Interest Expense
$
11,735
$
9,064
29%
Total Provisions for Credit Losses
$
(33)
$
(675)
95%
Net Income
$
2,099
$
2,235
(6)%
Diluted Earnings Per Common Share1
$
2.73
$
2.74
--
Average Diluted Common Shares
Outstanding
758
805
(6)%
“Our strong first-quarter results demonstrated the continued
business momentum we’ve achieved over the last several quarters
despite the uncertain macro environment,” said Stephen J. Squeri,
Chairman and Chief Executive Officer. “Revenues were up 29 percent
year-over-year, driven by Card Member spending growth of 35 percent
globally on an FX-adjusted basis, with volumes reaching a monthly
record high in March.
"This performance was enabled by our ongoing investments in
areas critical to sustainable, long-term growth, including customer
acquisition, engagement and retention. We added 3 million new
proprietary cards in the quarter, as acquisitions of U.S. Consumer
Platinum and Gold Cards and U.S. Business Platinum Cards reached
all-time highs for the quarter. With travel activity continuing to
pick up, we also had record monthly acquisitions for our Delta
Cards in March.
“We also saw increased engagement across our customer
categories, led by strong spending by Millennial and Gen Z Card
Members and small and medium-sized businesses, which were up 56
percent and 30 percent, respectively, on an FX-adjusted basis over
last year. Goods and Services spending, which is the largest
category of spending on our network, continued to accelerate in the
quarter, growing 21 percent on an FX-adjusted basis over last year.
Travel and Entertainment spending was up 121 percent on an
FX-adjusted basis over a year ago and essentially reached
pre-pandemic levels globally for the first time in March, driven by
continued strength in consumer travel.
“Our customer retention remained at very high levels throughout
the quarter, demonstrating the high value that customers place on
American Express Membership.
“These results are in line with our expectations for the full
year, and we are reaffirming our full-year guidance of 18 to 20
percent revenue growth and earnings per share between $9.25 and
$9.65.”
First-quarter consolidated total revenues net of interest
expense were $11.7 billion, up 29 percent from $9.1 billion a year
ago. The increase primarily reflected growth in Card Member
spending compared to the prior year.
Consolidated provisions for credit losses resulted in a benefit
of $33 million, compared with a benefit of $675 million a year ago.
The change primarily reflected a significantly lower net reserve
release in the current quarter compared with a year ago, partially
offset by lower net write-offs in the current quarter, with credit
metrics remaining near historic lows.
Consolidated expenses were $9.1 billion, up 34 percent from $6.7
billion a year ago, reflecting higher customer engagement costs
primarily driven by a 30 percent increase in network volumes.
Operating expenses were also higher, primarily reflecting net gains
on Amex Ventures equity investments in the prior year and increased
compensation costs in the current quarter.
The consolidated effective tax rate was 22.6 percent, down from
25.3 percent a year ago. The decrease primarily reflected discrete
tax benefits in the current quarter.
Global Consumer Services Group reported first-quarter
pretax income of $1.7 billion, compared with $2.1 billion a year
ago.
Total revenues net of interest expense were $6.9 billion, up 27
percent from $5.4 billion a year ago. The increase primarily
reflected growth in Card Member spending compared to the prior
year.
Provisions for credit losses resulted in a benefit of $55
million, compared with a benefit of $503 million a year ago. The
change primarily reflected a significantly lower net reserve
release in the current quarter compared with a year ago, partially
offset by lower net write-offs in the current quarter.
Total expenses were $5.2 billion, up 38 percent from $3.8
billion a year ago. The increase reflected higher customer
engagement costs primarily driven by increased network volumes.
Operating expenses were also higher primarily as a result of
increased compensation, as well as technology and servicing
costs.
Global Commercial Services reported first-quarter pretax
income of $804 million, compared with $675 million a year ago.
Total revenues net of interest expense were $3.5 billion, up 31
percent from $2.7 billion a year ago, primarily reflecting growth
in Card Member spending compared to the prior year.
Provisions for credit losses were $21 million, compared with a
benefit of $161 million a year ago. The change primarily reflected
lower reserve releases compared with a year ago, partially offset
by lower net write-offs in the current quarter.
Total expenses were $2.7 billion, up 24 percent from $2.1
billion a year ago, reflecting higher customer engagement costs
primarily driven by increased network volumes. Operating expenses
were also higher primarily as a result of increased compensation,
as well as technology and servicing costs.
Global Merchant and Network Services reported
first-quarter pretax income of $687 million, compared with $385
million a year ago.
Total revenues net of interest expense were $1.4 billion, up 30
percent from $1.1 billion a year ago, primarily reflecting an
increase in network volumes compared to the prior year.
Total expenses were $715 million, up 1 percent from $707 million
a year ago.
Corporate and Other reported a first-quarter pretax loss
of $514 million, compared with a pretax loss of $212 million a year
ago. The decline was primarily driven by net gains on Amex Ventures
equity investments in the prior year.
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 first quarter 2022, 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 first-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,
including management’s outlook for 2022, expectations for 2023 and
aspirations for 2024 and beyond, 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:
- the company’s ability to achieve its 2022 earnings per common
share (EPS) outlook, grow earnings in the future and execute on its
growth plan, which will depend in part on revenue growth, credit
performance and the effective tax rate remaining consistent with
current expectations and the company’s ability to continue
investing in its brand, customers, value proposition, coverage,
technology and talent, controlling operating expenses, effectively
managing risk and executing its share repurchase program; any of
which could be impacted by, among other things, the factors
identified in the subsequent paragraphs as well as the following:
the extent and duration of the effect of the pandemicon the
economy, consumer and business spending, and customer behaviors,
such as with respect to travel, dining, shopping and in-person
events; Russia’s invasion of Ukraine and related geopolitical
impacts; the effects and duration of inflation, staffing shortages,
supply chain issues and increased energy costs; the impact on
consumers and businesses as forbearance and government support
programs end; issues impacting brand perceptions and the company’s
reputation; the impact of any future contingencies, including, but
not limited to, restructurings, investment gains or losses,
impairments, changes in reserves, legal costs and settlements, the
imposition of fines or civil money penalties and increases in Card
Member remediation; impacts related to new or renegotiated cobrand
and other partner agreements; and the impact of regulation and
litigation, which could affect the profitability of the company’s
business activities, limit the company’s ability to pursue business
opportunities, require changes to business practices or alter the
company’s relationships with Card Members, partners and
merchants;
- the company’s ability to achieve its 2022 revenue growth
outlook, its revenue growth expectations for 2023 and its revenue
growth aspirations for 2024 and beyond, which could be impacted by,
among other things, the factors identified above and in the
subsequent paragraphs as well as the following: a deterioration in
global economic and business conditions; consumer and business
spending volumes not growing in line with expectations; the amount
and efficacy of investments in share, scale and relevance; an
inability to address competitive pressures and implement strategies
and business initiatives, including within the premium consumer
space, commercial payments, the global merchant network and digital
environment; uncertainty regarding the continued spread of COVID-19
(including new variants) and the availability, distribution and use
of effective treatments and vaccines; prolonged measures to contain
the spread of COVID-19 (including travel restrictions), concern of
the possible imposition of further containment measures and health
concerns associated with the pandemic continuing to affect customer
behaviors and travel patterns and demand, any of which could
further exacerbate the effects on economic activity and
travel-related revenues; and merchant discount rates changing by a
greater or lesser amount than expected;
- net card fees not performing consistently with expectations,
which could be impacted by, among other things, a deterioration in
macroeconomic conditions impacting the ability and desire of Card
Members to pay card fees; higher Card Member attrition rates; the
pace of Card Member acquisition activity; and the company’s
inability to address competitive pressures, develop attractive
value propositions and implement its strategy of refreshing card
products and enhancing benefits and services;
- net interest income and the growth rate of loans outstanding
being higher or lower than expectations, which could be impacted
by, among other things, the behavior of Card Members and their
actual spending, borrowing and paydown patterns; the company’s
ability to effectively manage risk and enhance Card Member value
propositions; changes in benchmark interest rates; changes in
capital and credit market conditions and the availability and cost
of capital; credit actions, including line size and other
adjustments to credit availability; the yield on Card Member loans
not remaining consistent with current expectations; and the
effectiveness of the company’s strategies to capture a greater
share of existing Card Members’ spending and borrowings, and
attract new, and retain existing, customers;
- future credit performance, the level of future delinquency and
write-off rates and the amount and timing of future reserve builds
and releases, which will depend in part on changes in consumer
behavior that affect loan and receivable balances (such as paydown
and revolve rates); macroeconomic factors such as unemployment
rates, GDP and the volume of bankruptcies; the ability and
willingness of Card Members to pay amounts owed to the company,
particularly as forbearance and government support programs end;
the enrollment in, and effectiveness of, financial relief programs
and the performance of accounts as they exit from such programs;
collections capabilities and recoveries of previously written-off
loans and receivables; and governmental actions that provide forms
of relief with respect to certain loans and fees, such as limiting
debt collections efforts and encouraging or requiring extensions,
modifications or forbearance;
- the actual amount the company spends on marketing in 2022 and
beyond, which will be based in part on continued changes in the
macroeconomic and competitive environment and business performance;
the effectiveness of management’s investment optimization process,
management’s identification and assessment of attractive investment
opportunities and the receptivity of Card Members and prospective
customers to advertising and customer acquisition initiatives; the
company’s ability to balance expense control and investments in the
business; and management’s ability to drive increases in revenues
and realize efficiencies and optimize investment spending;
- the actual amount to be spent on Card Member rewards and
services and business development, and the relationship of these
variable customer engagement costs to revenues, which could be
impacted by continued changes in macroeconomic conditions and Card
Member behavior as it relates to their spending patterns (including
the level of spend in bonus categories), the redemption of rewards
and offers (including travel redemptions) and usage of
travel-related benefits; the costs related to reward point
redemptions; inflation; further enhancements to product benefits to
make them attractive to Card Members and prospective customers,
potentially in a manner that is not cost effective; new and
renegotiated contractual obligations with business partners; and
the pace and cost of the expansion of the company’s global lounge
collection;
- the company’s ability to control operating expenses, the actual
amount spent on operating expenses in 2022 and beyond and the
relationship of operating expense growth to revenue growth, which
could be impacted by, among other things, salary and benefit
expenses to attract and retain talent; costs due to new hybrid
working arrangements; supply chain issues; a persistent
inflationary environment; management’s decision to increase or
decrease spending in such areas as technology, business and product
development, sales force, premium servicing and digital
capabilities depending on overall business performance; the
company’s ability to innovate efficient channels of customer
interactions and the willingness of Card Members to self-service
and address issues through digital channels; the company’s ability
to increase automation more generally and leverage and grow its
scale; restructuring activity; fraud costs; information security or
compliance expenses or consulting, legal and other professional
services fees, including as a result of litigation or internal and
regulatory reviews; the level of M&A activity and related
expenses; information or cyber security incidents; the payment of
civil money penalties, disgorgement, restitution, non-income tax
assessments and litigation-related settlements; impairments of
goodwill or other assets; and the impact of changes in foreign
currency exchange rates on costs;
- the company’s tax rate not remaining consistent with current
levels, which could be impacted by, among other things, changes in
tax laws and regulation, the company’s geographic mix of income,
unfavorable tax audits and other unanticipated tax items;
- changes affecting the company’s plans regarding the return of
capital to shareholders, which will depend on factors such as
capital levels and regulatory capital ratios; changes in the stress
testing and capital planning process and new guidance from the
Federal Reserve; results of operations and financial condition;
credit ratings and rating agency considerations; and the economic
environment and market conditions in any given period;
- our ability to implement our ESG strategies and initiatives,
which depend in part on the amount and efficacy of our investments
in product innovations, marketing campaigns, our supply chain and
operations, and philanthropic, colleague and community programs;
customer behaviors; and the cost and availability of solutions for
a low carbon economy;
- changes in the substantial and increasing worldwide competition
in the payments industry, including competitive pressure that may
materially impact the prices charged to merchants that accept
American Express cards, the desirability of the company’s premium
card products, competition for new and existing cobrand
relationships, competition from new and non-traditional competitors
and the success of marketing, promotion and rewards programs;
- the possibility the actual amount the company earns from new
Card Members will be lower than estimated, which will depend in
part on factors such as changes in the economic and business
environment, the effectiveness of the company’s marketing and
loyalty programs to continue to engage Card Members and the
willingness of Card Members to sustain spending and borrowing
behaviors;
- a failure in or breach of the company’s operational or security
systems, processes or infrastructure, or those of third parties,
including as a result of cyberattacks, which could compromise the
confidentiality, integrity, privacy and/or security of data,
disrupt the company’s operations, reduce the use and acceptance of
American Express cards and lead to regulatory scrutiny, litigation,
remediation and response costs, and reputational harm;
- legal and regulatory developments, which could affect the
profitability of the company’s business activities; limit the
company’s ability to pursue business opportunities or conduct
business in certain jurisdictions; require changes to business
practices or alter the company’s relationships with Card Members,
partners, merchants and other third parties, including its ability
to continue certain cobrand relationships in the EU; exert further
pressure on the average discount rate and the company’s GNS
business; result in increased costs related to regulatory
oversight, litigation-related settlements, judgments or expenses,
restitution to Card Members or the imposition of fines or civil
money penalties; materially affect capital or liquidity
requirements, results of operations or ability to pay dividends; or
result in harm to the American Express brand; and
- factors beyond the company’s control such as a further
escalation of the military conflict between Russia and Ukraine,
future waves of COVID-19 cases, the severity and contagiousness of
new variants, severe weather conditions, natural disasters, power
loss, disruptions in telecommunications, terrorism and other
catastrophic events, any of which could significantly affect demand
for and spending on American Express cards, delinquency rates, loan
and receivable balances and other aspects of the company’s business
and results of operations or disrupt its global network systems and
ability to process transactions.
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, 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 $16
million and $15 million for the three months ended March 31, 2022
and 2021, respectively, and, (ii) dividends on preferred shares of
$14 million for both the three months ended March 31, 2022 and
2021.
As used in this release:
- Card Member spending (billed business) represents transaction
volumes, including cash advances, on payment products issued by
American Express.
- Customer engagement costs represent the aggregate of Card
Member rewards, business development, Card Member services, and
marketing expenses.
- FX-adjusted information assumes a constant exchange rate
between the periods being compared for purposes of currency
translations into U.S. dollars (i.e., assumes the foreign exchange
rates used to determine results for the three months ended March
31, 2022 apply to the period against which such results are being
compared).
- Network volumes represent the total of billed business and
processed volumes.
- Operating expenses represent salaries and employee benefits,
professional services, data processing and equipment, and other,
net.
- Reserve releases and reserve builds represent the portion of
the provisions for credit losses for the period related to
increasing or decreasing reserves for credit losses as a result of,
among other things, changes in volumes, macroeconomic outlook,
portfolio composition, and credit quality of portfolios. Reserve
releases represent the amount by which net write-offs exceed the
provisions for credit losses. Reserve builds represent the amount
by which the provisions for credit losses exceed net
write-offs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220422005057/en/
Media: Leah M. Gerstner, Leah.M.Gerstner@aexp.com,
+1.212.640.3174 Andrew R. Johnson, Andrew.R.Johnson@aexp.com,
+1.212.640.8610
Investors/Analysts: Vivian Y. Zhou,
Vivian.Y.Zhou@aexp.com, +1.212.640.5574 Michelle A. Scianni,
Michelle.A.Scianni@aexp.com, +1.212.640.5574
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