American Express reports third-quarter revenue of $10.9 billion and earnings per share of $2.27

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American Express Company (NYSE: AXP) today reported third-quarter net income of $1.8 billion, or $2.27 per share, compared with net income of $1.1 billion, or $1.30 per share, a year ago.

“Our strong third quarter results once again reflect accelerating momentum in our core business and outstanding credit performance, enabled by the strategic decisions we’ve made over the last several years,” said Stephen J. Squeri, Chairman and Chief Executive Officer.

“Revenues jumped 25% from a year ago and Card Member spending accelerated from the previous quarter, reaching record highs for the third quarter. The growth was powered by consumer and small business spending on goods and services, which grew 19% over Q3 2019 on an FX-adjusted basis. We also saw a continued rebound in travel and entertainment spending, with restaurant spending notably resilient, growing above pre-pandemic levels in the quarter.

“The strategic investments we’ve made over the past year, particularly those to attract new Millennial and Gen Z customers and expand our leadership position with small businesses, are helping fuel the strong momentum we’re seeing in spending, customer acquisition, engagement, and retention. Spending by Millennial and Gen Z Card Members grew 38% above Q3 2019 levels on an FX-adjusted basis. We acquired 2.6 million new proprietary cards in Q3, with acquisitions of our U.S. consumer and small business Platinum and Gold Cards reaching all-time highs while our Card Member retention and satisfaction metrics are better than pre-pandemic levels.

“We’re operating from a position of strength, and we see more opportunity ahead to drive sustainable, long-term growth. With the progress we’ve made against our key priorities this year, we remain confident in our ability to be within the high end of the range of the EPS expectations we had for 2020 in 2022.”

Third-quarter consolidated total revenues net of interest expense were $10.9 billion, up 25 percent from $8.8 billion a year ago. The quarter primarily reflected growth in Card Member spending, as well as a rise in the average discount rate resulting from the change in the mix of spending driven by increased levels of travel and entertainment spending, compared to the prior year.

Consolidated provisions for credit losses resulted in a benefit of $191 million, compared with a provision expense of $665 million a year ago. The change in provisions primarily reflected credit reserve releases of $393 million and lower net write-offs in the current quarter.

Consolidated expenses were $8.7 billion, up 29 percent from $6.7 billion a year ago, reflecting higher customer engagement costs. Customer engagement costs were up due to an increase in Card Member spending, higher marketing investments to continue building growth momentum, and higher usage of travel-related Card Member benefits. Operating expenses were slightly higher as a result of increased salary and benefits, partially offset by gains related to certain Amex Ventures equity investments.

The consolidated effective tax rate was 25.5 percent, up from 21.3 percent a year ago. The increase primarily reflected changes in the level and geographic mix of pretax income and discrete tax charges in the current quarter.