The impact of the loss of the U.S. Costco and JetBlue programs is manifesting itself in the American Express (AmEx) U.S. Card Services (USCS) unit during the first quarter (1Q/16). However, AmEx continues to open new accounts at a record clip.
Revenue and income were up slightly year-on-year (YOY) as outstandings (OUT) took a big hit.
AmEx reported 1Q/16 gross revenue for USCS rose 2.8% YOY to $3280 million, compared to $3372 million for the fourth quarter and $3190 million for the first quarter of 2015.
USCS first quarter net income increased 5.3% YOY to $694 million, compared to $541 million on 4Q/15 and $659 million for 1Q/15.
AmEx U.S. card gross dollar volume (GDV) for 1Q/16, increased 4.1% YOY to $176.3 billion, compared to $190.2 billion for 4Q/15 and $169.4 billion for 1Q/15.
AmEx noted that average U.S. card spend per cardholder declined 1.6% YOY to $4249, compared to $4633 for the prior quarter, and $4320 for the year ago quarter.
End-of-Period (EOP) U.S. credit card outstandings for 1Q/16 declined 15.4% YOY, but adding in the discontinued U.S. Costco and JetBlue programs, outstandings were flat (+0.7%) YOY. Reported EOP GDV for 1Q/16 was $50.7 billion, compared to $51.5 billion for 4Q/15 and $59.9 billion for 1Q/15. The discontinued programs would have added $9.6 billion for 1Q/16.
Total U.S. credit card loans for 1Q/16 declined 15.7% YOY to $42.4 billion, compared to $43.5 billion for 4Q/15 and $50.3 billion for 1Q/15.
Average U.S. credit card loans for 1Q/16 declined 16.5% YOY to $42.5 billion, compared to $50.5 billion for 4Q/15 and $50.9 billion for 1Q/15.
Total U.S. credit card receivables for 1Q/16 declined 1.9% YOY to $10.3 billion, compared to $11.8 billion for 4Q/15 and $10.5 billion for 1Q/15.
USCS basic cards-in-force (CIF) rose 6.4% YOY in the first quarter to 45.1 million, compared to 44.8 million for the prior quarter and 42.4 million in the year ago quarter.
USCS total CIF rose 5.7% YOY in the first quarter to 57.9 million, compared to 57.6 million for the prior quarter and 54.8 million in the year ago quarter.
The AmEx U.S. card 30+ day delinquency (DEL), as a percentage of total loans, increased 10 basis points (bps) YOY, and flat Quarter-To-Quarter (QTQ) for 1Q/16. The issuer reported a DEL ratio of 1.0% for 1Q/16, compared to 1.0% for 4Q/15 and 0.9% for 1Q/15.
The AmEx U.S. card 30+ day delinquency (DEL), as a percentage of total receivables, decreased 10 bps YOY, and flat QTQ for 1Q/16. The issuer reported a DEL ratio of 1.4% for 1Q/16, compared to 1.4% for 4Q/15 and 1.5% for 1Q/15.
The AmEx U.S gross principal credit card charge-off (CO) ratio, as a percentage of average loans, for 1Q/16 was flat YOY and up 10 bps QTQ.
The issuer reported a gross principal charge-off ratio of 1.7% for 1Q/16, compared to 1.6% for 4Q/15 and 1.7% for 1Q/15.
The AmEx U.S. net principal credit card CO ratio, as a percentage of average loans, for 1Q/16 was flat YOY and up 10 bps QTQ. The issuer reported a gross principal CO ratio of 1.5% for 1Q/16, compared to 1.4% for 4Q/15 and 1.5% for 1Q/15.
The AmEx U.S. gross principal credit card CO ratio, as a percentage of total receivables, for 1Q/16 was down 30 bps YOY and up 20 bps QTQ.
The issuer reported a gross principal charge-off ratio of 1.8% for 1Q/16, compared to 1.6% for 4Q/15 and 2.1% for 1Q/15.
The AmEx U.S. ratio of net interest income as a percentage of average U.S. loans rose 20 bps YOY and 20 bps QTQ in the first quarter. Figures were 9.3% for 1Q/16, compared to 9.1% in the prior quarter and 9.1% for the year ago quarter.
The AmEx U.S. card net interest yield (YLD) rose 10 bps YOY and 40 bps QTQ in 1Q/16. The YLD for 1Q/16 was 9.5%, compared to 9.1% for 4Q/15 and 9.4% for 1Q/15.
USCS GROSS REVENUE
1Q/15: $3190 million
2Q/15: $3307 million
3Q/15: $3318 million
4Q/15: $3372 million
1Q/15: $3280 million
USCS NET INCOME
1Q/15: $659 million
2Q/15: $613 million
3Q/15: $542 million
4Q/15: $541 million
1Q/16: $694 million
U.S. CARD GDV
1Q/15: $169.4 billion
2Q/15: $181.8 billion
3Q/15: $180.4 billion
4Q/15: $190.2 billion
1Q/16: $176.3 billion
U.S. AVG GDV/CARDHOLDER
U.S. OUT EOP**
1Q/15: $59.9 billion
2Q/15: $61.8 billion
3Q/15: $62.1 billion
4Q/15: $51.5 billion + $12.6 billion
1Q/16: $50.7 billion + $9.6 billion
U.S. TOTAL CARD LOANS**
1Q/15: $50.3 billion
2Q/15: $51.8 billion
3Q/15: $52.2 billion
4Q/15: $43.5 billion
1Q/16: $42.4 billion
U.S. AVERAGE CARD LOANS**
1Q/15: $50.9 billion
2Q/15: $51.1 billion
3Q/15: $52.1 billion
4Q/15: $50.5 billion
1Q/16: $42.5 billion
U.S. TOTAL CARD RECEIVABLES**
1Q/15: $10.5 billion
2Q/15: $10.8 billion
3Q/15: $10.5 billion
4Q/15: $11.8 billion
1Q/16: $10.3 billion
U.S. BASIC CIF*
1Q/15: 42.4 million
2Q/15: 42.8 million
3Q/15: 43.6 million
4Q/15: 44.8 million
1Q/16: 45.1 million
U.S. TOTAL CIF*
1Q/15: 54.8 million
2Q/15: 55.3 million
3Q/15: 56.4 million
4Q/15: 57.6 million
1Q/16: 57.9 million
U.S. 30+ DAY DEL (TOTAL LOANS)
U.S. 30+ DAY DEL (TOTAL RECEIVABLES)
GROSS PRINCIPAL CO (AVG LOANS)
NET PRINCIPAL CO (AVG LOANS)
GROSS PRINCIPAL CO (TOTAL RECEIVABLES)
NET PRINCIPAL CO (TOTAL RECEIVABLES)
NET INTEREST INC/AVG OUT
NET INTEREST YIELD
* excludes Costco and JetBlue programs Held for Sale;
SOURCE: American Express
AmEx noted the following regarding USCS 1Q/16:
USCS reported first-quarter net income of $694 million, up 5% from $659 million a year ago.
Total revenues net of interest expense increased 3% to $3.3 billion from $3.2 billion a year ago. The rise primarily reflected higher net interest income from growth in the loan portfolio.
Provisions for losses totaled $190 million, down 2% from $193 million a year ago. The decrease resulted from the previously mentioned accounting for certain cobrand loans as “held for sale.” That impact was partially offset by higher loan balances, excluding the “held for sale” loans in both periods.
Total expenses were $2 billion, up 2% from a year ago. The current quarter reflected higher marketing, rewards and Card Member services costs, partially offset by the previously mentioned gain on the sale of the JetBlue cobrand portfolio.
Note: U.S. Consumer Services, including the proprietary U.S. Consumer Card Services business and travel services in the United States.
International Consumer and Network Services, including the proprietary International Consumer Card Services business, Global Network Services business and travel services outside the United States.
result of system enhancements, certain balances have been reclassified between United States and outside the United States.
*Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee Card Members. Non-proprietary cards-in-force includes all cards that are issued and outstanding under network partnership agreements, except for retail cobrand Card Member accounts that have no out-of-store spend activity during the prior 12 month period.
**Effective December 1, 2015, the Company reclassified the Card Member loans and receivables related to its cobrand partnerships with Costco in the U.S. and Jetblue, to reflect them as Held for Sale (HFS) on the Consolidated Balance Sheets. The loans were reclassified at their net carrying amount, inclusive of the related reserves for losses. Accordingly, Card Member loans and receivables and the related credit metrics are presented excluding the HFS loans and receivables. Card Member loans HFS in USCS were $9.6 billion and $12.6 billion as of Q1’16 and Q4’15, respectively, and in GCS were $2.0 billion and $2.3 billion as of Q1’16 and Q4’15, respectively. Card Member receivables HFS in USCS were nil as of Q1’16 and Q4’15, and in GCS were $0.1 billion as of Q1’16 and Q4’15. Card Member loans in the GCS segment include an insignificant amount of loans related to the GCP business.
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