American Express Q1 2019 Earnings Breakdown: Q1 Adj. EPS $2.01 (est $1.99) | Q1 Sales $10.4B (est $10.5B)

by EarningsCallsApp

  • Q1 net income of $1,550 million or $1.80 per share, compared with net income of $1,634 million or $1.86 per share a year ago.
  • Q1 EPS of $1.80 included an addition to legal reserves of $0.21 per share related to a merchant litigation that has now been resolved.
  • Q1 consolidated total revenues net of interest expense were $10.4 billion, up 7% from $9.7 billion a year ago.
  • Consolidated provisions for losses were $809 million, up 4% from $775 million a year ago.
  • Operating expenses were up 10% from a year ago, primarily driven by the litigation-related charge.
  • The consolidated effective tax rate was 20.8%, down from 21.5% a year ago.
  • “We continued to expand our merchant network and added 3.1 million new proprietary cards in the quarter driven primarily by our digital acquisition initiatives. Billings growth remained solid across customer segments and geographies, with strong performance internationally, especially among consumers, small and mid-sized business customers. Loan growth continued to be strong, and credit quality remained at industry-leading levels.”
  • “During the quarter, we signed an extension of our partnership with Delta Air Lines that will take us to 2030. Delta is our largest cobrand partnership, and it’s one of the most valuable portfolios in the industry. Spending on our Delta cobrand products has grown by double digits annually for the past several years, and together we’ve acquired more than 1 million new accounts in each of the past two years. The partnership contributes significant revenue and earnings to both companies and, from a customer and shareholder perspective, we feel great about the opportunity it represents.”
  • Revenue and EPS guidance for the full year reaffirmed.

Global Consumer Services Group

  • Reported Q1 net income of $821 million, down 1% from $826 million a year ago.
  • Total revenues net of interest expense were $5.6 billion, up 9& from $5.1 billion a year ago. The rise primarily reflected higher loan volumes, Card Member spending and fee income.
  • Provisions for losses totaled $552 million, up 4% from $530 million a year ago. The rise primarily reflected continued growth in the loan portfolio and higher net lending write-offs, partially offset by a smaller reserve build compared to a year ago.
  • Total expenses were $4.0 billion, up 12% from $3.5 billion a year ago. The increase was primarily driven by higher customer engagement costs.
  • The effective tax rate was 21%, unchanged from a year ago.

Global Commercial Services

  • Reported Q1 net income of $586 million, up 7% from $546 million a year ago.
  • Total revenues net of interest expense were $3.2 billion, up 6% from $3.0 billion a year ago. The increase primarily reflected higher Card Member spending.
  • Provisions for losses totaled $254 million, up 6% from $240 million a year ago.
  • Total expenses were $2.2 billion, up 7% from $2.1 billion a year ago. The rise primarily reflected higher marketing and business development costs and increased operating expenses
  • The effective tax rate was 21%, down from 23% a year ago.

Global Merchant and Network Services

  • Reported Q1 net income of $631 million, up 22% from $516 million a year ago.
  • Total revenues net of interest expense were $1.6 billion, unchanged from a year ago.
  • Total expenses were $787 million, down 11% from $887 million a year ago, primarily due to a charge related to the sale of the company’s prepaid operations in the prior year.
  • The effective tax rate was 25%, down from 27% a year ago.

Corporate and Other

  • Reported Q1 net loss of $489 million, compared with a net loss of $254 million a year ago, primarily reflecting the impact of the litigation-related charge mentioned earlier.
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