American Express Co.
), also known as AmEx, reported its first-quarter 2013 operating
earnings per share of $1.15. The result comfortably surpassed the
Zacks Consensus Estimate of $1.11 and the year-ago quarter
earnings of $1.07 a share.
Consequently, net income from operations edged up 2% year over
year to $1.28 billion from $1.26 billion in the year-ago
AmEx's total billed business, or global card spending,
continued to witness improvement in the U.S. and beyond climbing
6% year over year to $224.5 billion. The increase came from
international cards-in-force that escalated 4% year over year to
$74.5 million, while cards-in-use improved 7% in the U.S.
Behind the Headlines
AmEx posted total revenue, net of interest expenses, of $7.88
billion, up 4% year over year from $7.59 billion but lagged the
the Zacks Consensus Estimate of $7.99 billion. The year-over-year
upside in revenues was supported by moderate growth in card
spending, net interest income and the loan portfolio. Further,
delinquency rates and yield exhibited stability, partially offset
by lower lending balances.
However, provisions for losses were $497 million, spiking 21%
from $412 million in the prior-year quarter. The increase was
driven primarily by lower reserve release, partially offset by
lower net write-offs in the reported quarter.
Meanwhile, AmEx's total expenses inched up 1% year over year
to $5.48 billion in the reported quarter. This reflected 4% rise
in card member rewards and professional services along with
higher occupancy and equipment expenses. These were partially
offset by lower salaries and benefits expenses along with market
and promotion expenses and stability in other operating expenses.
However, tax rate jumped to 33% from 29% in the year-ago
U.S. Card Services
reported a net income of $807 million, up 7% from $752 million in
the prior-year quarter. Total revenue, net of interest expenses,
increased 5% to $4.1 billion from $3.9 billion in the year-ago
International Card Services
net income came in at $178 million, declining 10% from $197
million in the year-ago quarter. However, total revenue, net of
interest expenses, came in at $1.3 billion, up 1% from the
year-ago quarter, driven by higher cardmember spending and annual
Global Commercial Services
net income improved 8% to $191 million from $177 million in the
prior-year quarter. Total revenue, net of interest expense,
inched up 1% year over year to $1.2 billion, reflecting higher
spending by corporate card members, while business travel
commissions and fees declined.
Global Network & Merchant Services
reported net income of $373 million, up 4% from $357 million in
the prior-year quarter. Total revenue, net of interest expense,
increased 4% year over year to $1.3 billion, driven by higher
Corporate & Other
reported net loss of $266 million compared with a net loss of
$227 million a year ago.
As of Mar 31, 2013, AmEx's total assets stood at $157 billion
(higher than $153 billion at 2012-end), while long-term debt
totalled $56 billion (down from $59 billion at 2012-end) against
cash of $28 billion (up from $22 billion at 2011-end). Meanwhile,
shareholder's equity totalled $19 billion at the end of the
reported quarter, unchanged from 2012-end.
As of Mar 31, 2013, AmEx's ROE was 23.2%, down from 27.1% in
the year-ago period. Return on average common equity (ROCE) was
23.0%, declining from 26.8% in the prior-year quarter. Further,
return on average tangible common equity was 29.3%, also down
from 35.0% in the comparable period last year. However, book
value increased 3% year over year to $17.56 per share.
Capital Deployment Update
During the reported quarter, AmEx repurchased 13 million
shares, at an average price of $61.73, for a total of $802.5
On Mar 14, 2013, management had disclosed its plans to buy
back shares worth $3.2 billion in 2013, followed by another $1.0
billion of share repurchase in the first quarter of 2014.
Meanwhile, the company also intends to hike its regular quarterly
dividend by 15% to 23 cents in the second quarter of 2013.
On Mar 25, 2013, the board of AmEx also authorized a share
repurchase program worth 150 million shares, thereby replacing
the prior one.
On Mar 25, 2013, the board of AmEx declared a regular
quarterly dividend of 20 cents per share, which is payable on May
10, 2013 to shareholders of record as on Apr 5, 2013.
On Feb 8, 2013, AmEx paid a regular quarterly dividend of 20
cents per share to shareholders of record as on Jan 4, 2013.
In Mar 2012, this dividend was hiked by 11% from 18 cents,
which was sustained even during the recession period.
) are scheduled to release their first quarter results before the
market opens and after the closing bell on May 1, 2013,
respectively. While AmEx carries a Zacks Rank #2 (Buy), Visa
carries a Zacks #3 Rank (Hold) and MasterCard holds a Zacks Rank
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