How American Express Fell Short in Q3

Banking, finance, and taxes

Published: October 23, 2020 10:14 am

American Express Co. (NYSE: AXP) released its third-quarter financial results before the markets opened on Friday. The company said that it had $1.30 in earnings per share (EPS) and $8.75 billion in revenue, which compares with consensus estimates of $1.33 in EPS and revenue of $8.66 billion. The same period of last year reportedly had EPS of $2.08 on $10.99 billion in revenue.

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Third-quarter consolidated total revenues net of interest expense were $8.8 billion, down 20% from $10.99 billion a year ago. The quarter primarily reflected declines in Card Member spending and the average discount rate compared to the prior year.

Consolidated provisions for losses were $665 million, down 24% from $879 million a year ago. The decrease primarily reflected a modest reserve release and lower net write-offs. Total credit reserve levels at the end of the third quarter were generally consistent with second-quarter levels.

In terms of its segments, Amex reported as follows:

Global Consumer Services Group reported third-quarter net income of $855 million, compared with $991 million a year ago. Total revenues net of interest expense were $5.2 billion, a decrease of 16% year over year.
Global Commercial Services posted net income of $220 million, compared with $568 million a year ago. Total revenues net of interest expense decreased 23% to $2.5 billion.
Global Merchant and Network Services reported net income of $263 million, compared with $523 million last year. Total revenues net of interest expense decreased 27% to $1.1 billion.
Corporate and Other reported a third-quarter net loss of $265 million, compared with a net loss of $327 million a year ago.

The company offered no guidance for the fourth quarter. However, analysts are calling for $1.44 in EPS and $9.63 billion in revenue for the quarter.

American Express stock traded down 2.5% early Friday at $102.15, in a 52-week range of $67.00 to $138.13. The consensus price target is $106.04.

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