Redwood AXP is a steamrolling earnings churning machine!!
Company Press Release
SOURCE: American Express Company
American Express Company Reports Record Quarterly Net Income of $646 Million
(millions, except per share amounts)
Six Months Quarter Ended Percentage Ended Percentage June 30 Inc/(Dec) June 30 Inc/(Dec) 1999 1998 1999 1998
Net Income $646 $578 11.8% $1,221 $1,037 17.7% Net Revenues $4,820 $4,286 12.5% $9,332 $8,320 12.2% Per Share Net Income Basic $ 1.44 $ 1.27 13.4% $ 2.73 $ 2.26 20.8% Diluted $ 1.41 $ 1.24 13.7% $ 2.67 $ 2.22 20.3% Average Common Shares Outstanding Basic 447.4 456.3 (2.0%) 447.5 458.4 (2.4%) Diluted 457.1 465.3 (1.8%) 456.5 467.4 (2.3%) Return on Average Equity 25.3% 23.5% -- 25.3% 23.5% --
The 1998 six-month results include a $138 million (after-tax) credit loss provision at American Express Bank relating to its Asia/Pacific portfolio, as well as income of $78 million (after-tax) representing gains on the sale of First Data Corporation shares and a preferred dividend based on Lehman Brothers earnings. Excluding these items, income rose 11.2 percent from $1,097 million (versus 17.7 percent from $1,037 million) and diluted earnings per share grew 13.6 percent from $2.35 (versus 20.3 percent from $2.22).
NEW YORK, July 26 /PRNewswire/ -- American Express Company (NYSE: AXP - news) today reported record quarterly net income of $646 million, up from $578 million in the same period a year ago. Diluted earnings per share rose 14 percent to $1.41 compared with $1.24. Net revenues totaled $4.8 billion, up 12 percent from $4.3 billion. The Company's return on equity was 25.3 percent.
These results were in line with American Express' long-term targets of 12-15 percent earnings per share growth and at least 8 percent growth in revenues. Return on equity exceeded the Company's long-term target of 18-20 percent.
The 1999 second-quarter results reflect strong earnings and revenue growth at Travel Related Services and American Express Financial Advisors. Due to a change in accounting rules, the Company is required to capitalize software costs rather than to expense them as they occur. For the second quarter of 1999, this amounted to a benefit of $67 million (net of amortization). This benefit was offset by increased investment spending and therefore had no material impact on net income.
Travel Related Services (TRS) reported record quarterly net income of $411 million, up 14 percent from $360 million in the second quarter a year ago.
TRS' net revenues increased 12 percent from the prior year, reflecting higher billed business in the United States and internationally, growth in Cardmember loans and higher travel commissions and fees.
The improvement in billed business resulted from higher spending per Cardmember, which was based on several factors, including the benefits of rewards programs and expanded merchant coverage. This growth came despite the Company's decision last year to withdraw from the U.S. Government card business, which represented approximately $3.5 billion in annualized spending and 1.6 million cards. Excluding the loss of the Government card business, total cards in force rose 1.7 million from a year ago, with about one million of these cards added in the current quarter. The increase in travel commissions and fees was driven by acquisitions during the latter part of 1998, which increased revenues and expenses, but did not have a material effect on earnings. Other revenues also increased, resulting principally from a higher level of securitized receivables, acquisitions and core business growth.
The provision for losses on the charge card portfolio rose as a result of higher volume, partly offset by a continued improvement in credit quality. The provision for losses on the lending portfolio declined as a result of securitizing a portion of the portfolio and improved loss rates, which more than offset the impact of higher loan volumes. Human resources expenses rose, mainly due to acquisitions and increased business volumes. Other operating expenses increased due in part to the cost of Cardmember loyalty programs, business growth and investment spending.
The securitization of credit card receivables produced a gain of $99 million ($64 million after-tax). This gain, and the previously mentioned benefit from software capitalization, were offset by higher spending on marketing and promotion related to card acquisition, Internet activities and other business building initiatives. A similar gain of $36 million ($23 million after-tax) a year ago was offset by increased spending on marketing and promotion. These items had no material impact on net income or total expenses in either period.
American Express Financial Advisors (AEFA) reported record quarterly net income of $242 million, up 14 percent from $212 million reported a year ago.
Net revenues and earnings growth benefited from higher fee revenues due to an increase in managed assets, reflecting positive net sales and market appreciation, as well as wider investment margins. AEFA reported record sales of mutual funds and investment certificates. Sales of life and other insurance products and annuities increased. Human resources expenses rose, largely because of compensation costs associated with higher sales and asset levels. Other operating expenses rose primarily from costs related to higher business volumes and investments to build the business.
American Express Bank/Travelers Cheque (AEB/TC) reported quarterly net income of $38 million compared with $47 million a year ago. Travelers Cheque results were in line with the prior year.
Net income declined as a result of lower foreign exchange trading revenues, primarily in Asia, and higher operating expenses due to costs associated with new consumer product introductions and realigning business activities in certain countries.
Corporate and Other reported net expenses of $45 million, compared with $41 million a year ago.
American Express Company (http://www.americanexpress.com), founded in 1850, is a global travel, financial and network services provider. |
