American Express reported its Travel Related Services division produced third quarter net income of $553 million, twice last year’s third quarter earnings, but down $12 million from 2Q/02. The earnings were driven by higher volume and wider net-interest yields, despite flat card growth for the third consecutive quarter. Volume was up 7% over 3Q/02, but lower than the second quarter level. As a result, merchant fees rose 5% as average discount rates declined from 2.67% for 3Q/01, to 2.63%. AmEx says charge card interest expense decreased 33% due to lower funding costs and lower receivable balances. Human resources expense declined primarily as a result of lower staffing levels, outsourcing, and other cost containment efforts. The AmEx card portfolio also showed that delinquency and charge-offs were flat compared to one year ago. However, delinquency edged up slightly to 3.2% for the third quarter. Charge-offs declined significantly from the second quarter from 6.2% to 5.6%. AmEx also noted that marketing and promotion expenses rose 31% from year-ago levels, reflecting expanded card acquisition programs and the introduction of new rewards-oriented card products during the quarter. Other operating expenses increased due in part to higher cardholder loyalty program costs and the impact of the technology outsourcing agreement with IBM. For complete details on AmEx’s third quarter performance as well as prior quarter visit CardData ([www.carddata.com][1]).
American Express U.S. Card Portfolio Snapshot
3Q/02 2Q/02 1Q/02 4Q/01 3Q/01 Ann Chng
Volume $58.2b 58.7b 54.3b 55.8b 54.4b +7.0%
Loans $32.2b 31.6b 31.3b 32.0b 31.3b +2.9%
Cards 34.8m 34.8m 34.8m 34.6m 34.7m +0.3%
Delinq* 3.2% 3.1% 3.4% 3.3% 3.2% NC
Losses 5.6% 6.2% 6.5% 5.9% 5.6% NC
Yield** 9.7% 9.8% 9.6% 9.6% 8.8% +10.2%
* 30+ days past due; ** net interest yield
Source: CardData (www.carddata.com)
[1]: http://www.carddata.com