American Express (AmEx) third quarter profits slipped year-on-year (YOY) by 10.7% to $794 million. AmEx says revenue and billed business levels were suppressed by a stronger U.S. dollar, plus renewals and changes it made earlier this year to some co-brand relationships also entailed some significant incremental expenses in Q3.
U.S. credit card outstandings rose 7.1% to $62.1 billion, compared to $61.7 billion in the prior quarter and $58.0 billion in year ago quarter.
U.S. credit card Purchase Dollar Volume (PDV) rose 5.3% to $143.4 billion, compared to $144.7 billion in the prior quarter and $136.2 billion in year ago quarter.
Early stage delinquency (30+ days) for U.S. cards was stable at 1.6% for the third quarter, compared to 1.6% in the second quarter and 1.5% for the year ago quarter.
Charge-offs for U.S. cards was also stable at 1.5% for the third quarter, compared to 1.6% in the second quarter and 1.6% for the year ago quarter.
Yield remained strong at 9.4% for the third quarter, compared to 9.2% for 2Q/15 and 9.2% for 3Q/14.
AmEx reports U.S. Card Services total revenues net of interest expense increased 5% to $4.7 billion, from $4.5 billion a year ago. The rise reflected higher net interest income from growth in the loan portfolio and an increase in Card Member spending.
Provisions for losses totaled $390 million, up 23% from $316 million a year ago. The increase reflected an addition to reserves in the current year compared to a reserve release a year ago.
Total expenses increased 11% to $3.1 billion from $2.8 billion a year ago. The rise reflected in part higher spending on growth initiatives, primarily within marketing and promotion and technology development. The increase was also driven by higher rewards and services costs due to higher Card Member spending volumes and the impact of certain previously renewed co-brand partnerships.
International Card Services reported third-quarter net income of $89 million, down 37% from $142 million a year ago. The decline largely reflected a significant impact from a stronger U.S. dollar.
Total revenues net of interest expense were $1.2 billion, down 11% from $1.4 billion a year ago. On an FX-adjusted basis, revenues rose 4%, reflecting in part higher net card fees and an increase in revenues from the Loyalty Partner business.
Total expenses were $1.0 billion, down 6% from $1.1 billion a year ago. On an FX-adjusted basis, expenses were up 4%, reflecting increased spending on growth initiatives, primarily within marketing.
Global Commercial Services reported third-quarter net income of $151 million, down 26% from $204 million a year ago.
Total revenues net of interest expense were $817 million, down 9% from $900 million a year ago. On an FX-adjusted basis, revenues declined 5%, primarily reflecting a year-ago gain on the sale of investment securities and lower discount revenue.
Total expenses were $541 million, compared to $542 million a year ago. The quarter reflected expenses associated with technology development to support growth initiatives.
Global Network & Merchant Services reported third-quarter net income of $462 million, up 8% from $427 million a year ago.
Total revenues net of interest expense were $1.4 billion, down 6% from $1.5 billion a year ago. On an FX-adjusted basis, revenues increased 1 percent, reflecting in part increased revenue from bank partners.
Total expenses decreased 16% to $633 million, from $756 million a year ago, primarily reflecting a litigation reserve release associated with a recently rejected merchant class settlement.
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