American Express, or Amex, is a global financial services company. It offers various credit and charge cards for consumers and businesses. Founded in 1850, it started as an express mail business. Now, it is a major financial sector player. The company is headquartered in New York City and is part of the Dow Jones Industrial Average.
Amex is known for its good customer service and premium benefits. These include rewards programs, travel, and dining benefits, and exclusive event access. They have products for different market segments, from everyday consumers to large corporations.
American Express earns money from card processing fees that businesses pay when they accept Amex cards. It also earns from annual membership fees and interest on outstanding balances. Additionally, Amex provides business financing solutions and travel-related services for extra income.
American Express Fiscal Q4 2024
American Express (AXP) had a strong year with increased revenue, net income, and Card Member spending while continuing to invest in customer engagement and marketing.
Overall Performance for 2024:
- Net income was $10.1 billion ($14.01 per share), up from 2023.
- Total revenues were $65.9 billion, a 9% increase from last year. Revenue growth was driven by higher net interest income, more Card Member spending, and card fee growth.
- Provisions for credit losses were $5.2 billion, up from last year, due to higher net write-offs and a smaller reserve build.
- Expenses increased by 6% to $47.9 billion, mainly due to higher customer engagement and marketing costs, offset by lower operating expenses.
- The tax rate for the year was 21.5%, up from 20.3% last year.
4th Quarter 2024 Performance:
- Net income for the quarter was $2.2 billion ($3.04 per share), up from a year ago and slight above forecasts.
- Total revenues were $17.2 billion, a 9% increase from last year and a bit above expectation.
- Provisions for credit losses were $1.3 billion, down from $1.4 billion last year, due to lower reserve builds, offset by higher net write-offs.
- Expenses for the quarter were $13.1 billion, up 11%, driven by higher customer engagement and marketing costs.
- The tax rate for the quarter was 21.3%, down from 23% last year.
Guidance
In 2025, American Express anticipates revenue growth of 8-10% and an earnings per share (EPS) range of $15 to $15.5.
As they celebrate their 175th anniversary, they plan to raise the regular quarterly dividend on their common shares by 17%, from $0.70 to $0.82 per share, starting with the first quarter dividend declaration.
Board Statements
Stephen J. Squeri, Chairman and CEO highlights the achievements of American Express in 2024, such as record revenues of $65.9 billion, net income of $10.1 billion.. Key accomplishments include record annual card member spending, net card fee revenues, and 13 million new card acquisitions. The company also added millions of merchant locations globally. They ended the year with increased momentum, driven by stronger holiday season spending and disciplined expense management.
The company plans to increase its quarterly common stock dividend by 17% as they celebrate their 175th anniversary.
Squeri expresses confidence in sustaining this momentum, especially among Millennials, Gen Z consumers, and in key international markets, while continuing to invest in growth.
Impact on the Market
Despite strong earnings, stock declined after reporting higher provisions for credit losses. This was driven by increased net write-offs and a smaller reserve build.
Also, expenses rose by 6% mainly due to customer engagement and marketing costs. Lower operating expenses partly offset this increase. The effective tax rate increased to 21.5% from 20.3% last year. Despite strong financial performance, these factors contributed to the negative market reaction.
