Fourth-Quarter 2022
Revenue Increased 17% to a Record $14.2 Billion, Driven by Highest
Ever Quarterly Card Member Spending; EPS for Quarter Was
$2.07
Company Expects Full-Year
2023 Revenue Growth of 15% to 17% and EPS of $11.00 to $11.40 as It
Continues to Execute on Its Growth Plan
American Express Company (NYSE: AXP) today reported full-year
net income of $7.5 billion, or $9.85 per share, compared with net
income of $8.1 billion, or $10.02 per share, a year ago.
($ in millions, except per share
amounts, and where indicated)
Quarters Ended December
31,
Percentage Inc/(Dec)
Years Ended
December 31,
Percentage Inc/(Dec)
2022
2021
2022
2021
Total Network Volumes (Billions)
$413.3
$368.1
12
$1,552.8
$1,284.2
21
Total Revenues Net of Interest Expense
$14,176
$12,145
17
$52,862
$42,380
25
Total Provisions for Credit Losses
$1,027
$53
#
$2,182
$(1,419)
#
Net Income
$1,572
$1,719
(9)
$7,514
$8,060
(7)
Diluted Earnings Per Common Share1
$2.07
$2.18
(5)
$9.85
$10.02
(2)
Average Diluted Common Shares
Outstanding
746
769
(3)
752
790
(5)
# - Denotes a variance of 100 percent or more.
“We ended 2022 with record revenues, which grew 25 percent from
a year earlier, and earnings per share of $9.85, both well above
the guidance that we provided when we introduced our long-term
growth plan at the start of last year, despite a mixed economic
environment,” said Stephen J. Squeri, Chairman and Chief Executive
Officer.
“Our performance demonstrates that our strategy is working, and
our business is in an even stronger position today than before the
pandemic. We have significantly grown the company’s revenue base by
investing in our value propositions, increasing our generational
relevance, growing merchant acceptance, introducing new digital
capabilities, and enhancing our Membership Model with new lifestyle
offerings and financial services.
“This has led to sustained growth in customer acquisitions –
which reached a record 12.5 million new Card accounts in 2022 –
along with high levels of engagement and retention, which has
enabled us to build scale while driving momentum across our core
businesses. Our credit metrics remain strong, supported by our
premium customer base, exceptional risk management capabilities and
the thoughtful actions we have taken throughout the year.
“Given our momentum, we expect 2023 revenue growth of 15 percent
to 17 percent and earnings per share of $11.00 to $11.40. Our
performance to date and the opportunities ahead position us well to
deliver on our longer-term growth plan aspirations for double-digit
annual revenue growth and mid-teens EPS growth.”
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.
The consolidated effective tax rate for the full year was 21.6
percent, down from 24.6 percent a year ago, primarily reflecting
discrete tax benefits in the current year related to the resolution
of prior-year tax items.
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.
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.
Planned Dividend Increase
The company plans to increase the regular quarterly dividend on
its common shares outstanding by 15 percent, from $0.52 to $0.60
per share, beginning with the first quarter 2023 dividend
declaration.
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.
_______________________ 1 Diluted earnings per common share
(EPS) was reduced by the impact of (i) earnings allocated to
participating share awards and other items of $12 million and $11
million for the three months ended December 31, 2022 and 2021,
respectively, and $57 million and $56 million for the years ended
December 31, 2022 and 2021, respectively, (ii) dividends on
preferred shares of $14 million and $22 million for the three
months ended December 31, 2022 and 2021, respectively, and $57
million and $71 million for the years ended December 31, 2022 and
2021, respectively, and (iii) equity-related adjustments of $7
million and $16 million related to the redemption of preferred
shares for the three months and year ended December 31, 2021,
respectively.
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 December
31, 2022 apply to the period against which such results are being
compared). FX-adjusted revenues and expenses constitute non-GAAP
measures. The company 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.
- 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.
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 fourth 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 fourth-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 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,” “continue” 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 2023 earnings per common
share (EPS) outlook, grow earnings in the future and deliver 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 at high levels in areas that can drive sustainable growth
(including its brand, value propositions, customers, colleagues,
technology and coverage), 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: fiscal and monetary policies and macroeconomic
conditions, such as recession risks, effects of inflation, higher
interest rates, labor shortages or higher rates of unemployment,
supply chain issues, energy costs and the continued effects of the
pandemic; geopolitical instability, including the ongoing military
conflict between Russia and Ukraine; 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; issues
impacting brand perceptions and the company’s reputation; 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 2023 revenue growth
outlook and its revenue growth aspirations for 2024 and beyond, and
the sustainability of the company’s future growth, which could be
impacted by, among other things, the factors identified above and
in the subsequent paragraphs as well as the following: a slowdown
or increase in volatility in consumer and business spending
volumes; the strengthening of the U.S. dollar beyond expectations;
an inability to address competitive pressures, innovate in our
products and services, expand into value-adding products and
services and implement strategies and business initiatives,
including within the premium consumer space, commercial payments
and the global merchant network; the continued effects of the
COVID-19 pandemic, including the spread and severity of the virus,
the availability and effectiveness of treatments and vaccines, the
imposition of further containment measures and the lingering
impacts on customer behaviors, spending and travel patterns, 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, the effects of interest rates and the
growth rate of loans outstanding being higher or lower than
expectations, which could be impacted by, among other things, the
behavior and financial strength 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, including where such changes
affect the company’s assets or liabilities differently than
expected; 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,
reserve and write-off rates and the amount and timing of future
reserve builds and releases, which will depend in part on
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; changes in consumer behavior
that affect loan and receivable balances (such as paydown and
revolve rates); 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 2023 and
beyond, which will be based in part on continued changes in the
macroeconomic and competitive environment and business performance;
the company’s ability to realize marketing efficiencies, optimize
investment spending and drive increases in revenue; 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; and
the company’s ability to balance expense control and investments in
the business;
- 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; higher-than-expected customer remediation expenses;
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 and the
actual amount spent on operating expenses in 2023 and beyond, which
could be impacted by, among other things, salary and benefit
expenses to attract and retain talent, including with respect to an
increased colleague headcount; a persistent inflationary
environment; the company’s ability to realize operational
efficiencies, including through automation; 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; restructuring
activity; supply chain issues; 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; the performance of
Amex Ventures and other of the company’s investments; 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
expectations, 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, including increasing the level of the
dividend, 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; required company approvals; and the
economic environment and market conditions in any given
period;
- 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 company’s ability to expand its leadership in the premium
consumer space, which will be impacted in part by competition,
brand perceptions (including perceptions related to merchant
coverage) and reputation, and the company’s ability to develop and
market new benefits and value propositions that appeal to Card
Members and new customers, offer attractive services and rewards
programs and build greater customer loyalty, which will depend in
part on identifying and funding investment opportunities,
addressing changing customer behaviors, new product innovation and
development, Card Member acquisition efforts and enrollment
processes, including through digital channels, continuing to
realize the benefits from strategic partnerships, and evolving its
infrastructure to support new products, services, and
benefits;
- the company’s ability to build on its leadership in commercial
payments, which will depend in part on competition, the willingness
and ability of companies to use credit and charge cards for
procurement and other business expenditures as well as use the
company’s other products and services for financing needs,
perceived or actual difficulties and costs related to setting up
card-based B2B payment platforms, the company’s ability to offer
attractive value propositions and new products to potential
customers, the company’s ability to enhance and expand its payment
and lending solutions and build out a multi-product digital
ecosystem to integrate its broad product set, which is dependent on
the company’s continued investment in capabilities, features,
functionalities, platforms and technologies;
- the ability of the company to expand merchant coverage globally
and the company’s success, as well as the success of OptBlue
merchant acquirers and GNS partners, in signing merchants to accept
American Express, which will depend on, among other factors, the
company’s value propositions offered to merchants and merchant
acquirers for card acceptance, the awareness and willingness of
Card Members to use American Express cards at merchants, scaling
marketing and expanding programs to increase card usage,
identifying new-to-plastic industries and business as they form,
working with commercial buyers and suppliers to establish B2B
acceptance, increasing coverage in priority international cities
and countries and key industry verticals and executing on the
company’s plans in China and for continued technological
developments, including capabilities that allow greater digital
integration and modernization of the company’s authorization
platform;
- the company’s ability to stay on the leading edge of technology
and digital payment and travel solutions, which will depend in part
on the company’s success in evolving its products and processes for
the digital environment, developing new features in the Amex app
and enhancing digital channels, building partnerships and executing
programs with other companies, effectively utilizing artificial
intelligence and increasing automation to address servicing and
other customer needs, and supporting the use of the company’s
products as a means of payment through online and mobile channels,
all of which will be impacted by investment levels, new product
innovation and development and infrastructure to support new
products, services, benefits and partner integrations;
- 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 war in Ukraine and other military conflicts,
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, Quarterly Reports on Form
10-Q for the quarters ended March 31, June 30 and September 30,
2022 and the company’s other reports filed with the Securities and
Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230127005020/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: Kerri S. Bernstein,
Kerri.S.Bernstein@aexp.com, +1.212.640.5574 Michelle A. Scianni,
Michelle.A.Scianni@aexp.com, +1.212.640.5574
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