PYMNTS Daily Data Dive: Encouraging Amex Q3 Earnings

American Express surprised analysts with its third quarter earnings announcement yesterday [October 19], and stock jumped significantly in after-hours trading. Adjusted earnings per share exceeded analysts’ predictions, and the company raised its guidance for the rest of the year.

Chairman and CEO Kenneth Chenault said, “The year-to-date progress gives us greater confidence to substantially increase our investment spending during the remainder of the year and, at the same time, raise our 2016 earnings guidance.”

That confidence had the company solidly positioning itself for 2017. “While there’s more work and more challenges ahead, the investments we’re making are designed to position us for profitable, sustainable growth over the longer term, and we remain on track to earn at least $5.60 per share in 2017,” Chenault added. Predictions for earnings has been conservative because American Express ended its relationship with Costco last year. Costco accounted for 20 percent of American Express’ loans and 20 percent of its customers.

Here are the numbers:

$2 billion | The cost of segment expenses for Q3, $200 million less than a year ago

$401 million | Reported net income for Q3, compared to $542 a year ago

$6 | Expected adjusted earnings for the full year after the company raised its guidance; this figure had been between $5.40 and $5.70 a share

5% | The jump in stock price after Q3 earnings were announced

$1.20 | Adjusted earnings for American Express for Q3 on revenues of $7.77 billion; analysts had expected earnings of 97 cents on around $7.7 billion, according to CNBC



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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