American Express Company (AXP) Bundle
A Brief History of American Express
American Express (AXP) is a globally integrated payments company with a rich history that dates back to its founding in 1850. Initially, it began as an express mail business in Buffalo, New York. Over the years, it evolved into a financial services powerhouse known for its credit and charge card offerings.
Transformation into a Financial Services Company
In 1891, American Express introduced its first charge card, which marked a significant shift in the company's focus. The introduction of the charge card laid the groundwork for a series of innovative financial products and services that would define the company's future.
Public Offering and Initial Growth
American Express went public in 1965, trading on the New York Stock Exchange under the symbol AXP. The company's growth accelerated during the 1980s and 1990s, driven by the expansion of its charge card business and the introduction of credit cards.
Recent Financial Performance (2024)
As of September 30, 2024, American Express reported total revenues net of interest expense of $48.77 billion, an increase of 9% compared to $44.72 billion for the same period in 2023. The company's net income for the nine months ended September 30, 2024, was $7.96 billion, up from $6.44 billion in 2023.
Key Financial Metrics
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Total Revenues Net of Interest Expense (Millions) | $48,770 | $44,716 | 9% |
| Net Income (Millions) | $7,959 | $6,441 | 23% |
| Earnings per Share (EPS) | $10.99 | $8.60 | 28% |
| Total Assets (Millions) | $270,979 | $261,108 | 4% |
| Total Liabilities (Millions) | $241,272 | $233,051 | 4% |
| Total Shareholders' Equity (Millions) | $29,707 | $28,057 | 6% |
Market Position and Shareholder Returns
American Express has consistently maintained a strong market position within the financial services industry, particularly in the premium segment of the credit card market. The company returned $6.3 billion to shareholders in the form of share repurchases and dividends in the nine months ended September 30, 2024.
Recent Developments
In 2024, American Express became a Category III bank holding company, subject to heightened capital and liquidity requirements due to its total consolidated assets exceeding $250 billion. This transition reflects the company's ongoing growth and the regulatory landscape in the financial sector.
Conclusion
The history of American Express illustrates its evolution from a simple express mail service to a leading global payments company. With strong financial performance and a commitment to innovation, American Express continues to thrive in the competitive financial services market.
A Who Owns American Express Company (AXP)
Major Shareholders
As of 2024, American Express Company (AXP) has a diverse ownership structure, primarily comprising institutional investors, mutual funds, and individual shareholders. Below is a table summarizing the largest shareholders of AXP.
| Shareholder Type | Shareholder Name | Percentage Ownership | Number of Shares Owned (Millions) |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.0% | 56.0 |
| Institutional Investor | BlackRock, Inc. | 7.2% | 50.4 |
| Institutional Investor | State Street Corporation | 4.5% | 31.5 |
| Mutual Fund | Fidelity Investments | 4.4% | 30.8 |
| Individual Investor | Warren Buffett (Berkshire Hathaway) | 3.2% | 22.4 |
| Other | Other Shareholders | 72.7% | 510.0 |
Institutional Ownership Trends
Institutional ownership of American Express has increased over the past few years, reflecting growing confidence in the company's financial performance. As of September 30, 2024, approximately 87% of the total shares were held by institutional investors.
Shareholder Voting Power
American Express operates with a one-vote-per-share structure. This means that shareholders can exert influence over corporate governance, including board elections and significant corporate decisions. The total number of shares outstanding as of September 30, 2024, was approximately 704 million shares.
Recent Shareholder Actions
In the third quarter of 2024, American Express repurchased approximately 7.7 million shares at an average price of $245.30, totaling about $1.9 billion. This buyback program reflects the company's strategy to return capital to shareholders and manage its equity base effectively.
Preferred Shareholders
American Express has issued preferred shares, which have a different ownership structure compared to common shares. As of September 30, 2024, there were 1,600 preferred shares outstanding, with no significant voting rights compared to common shares.
Dividends and Returns to Shareholders
For the nine months ended September 30, 2024, American Express declared dividends of $1.5 billion to common shareholders, equating to $2.10 per share. This demonstrates the company's commitment to returning value to its shareholders.
Conclusion
American Express Company maintains a robust ownership structure with significant institutional holdings. The company’s strategy of share repurchases and regular dividend payments indicates a strong focus on shareholder value.
American Express Company (AXP) Mission Statement
Overview of the Mission Statement
The mission statement of American Express Company (AXP) emphasizes its commitment to providing exceptional customer service and innovative financial solutions. The company aims to be the world's most respected service brand, offering products and services that enhance the customer experience.
Financial Performance Metrics
As of the third quarter of 2024, American Express reported significant financial metrics that highlight its operational success:
| Financial Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net Income (Millions) | $2,507 | $2,451 | 2% |
| Earnings Per Share (Diluted) | $3.49 | $3.30 | 6% |
| Total Revenues (Millions) | $16,636 | $15,381 | 8% |
| Net Interest Income (Millions) | $4,006 | $3,442 | 16% |
| Total Expenses (Millions) | $12,076 | $11,048 | 9% |
| Card Member Loans (Millions) | $134,548 | $117,978 | 14% |
Key Statistics
American Express also reported the following key statistics for the three months ended September 30, 2024:
| Statistic | Value |
|---|---|
| Billed Business (Billions) | $93.6 |
| Proprietary Cards-in-Force (Millions) | 21.7 |
| Average Proprietary Basic Card Member Spending (Dollars) | $5,829 |
| Net Write-Off Rate (Principal, Interest, and Fees) | 2.4% |
| 30+ Days Past Due as a % of Total | 1.2% |
Market Position and Strategy
American Express continues to enhance its market position through various strategic initiatives. The company focuses on:
- Customer Loyalty: By offering rewards and benefits that resonate with consumer preferences.
- Digital Innovation: Investing in technology to streamline services and improve customer engagement.
- Global Expansion: Increasing its footprint in international markets to tap into new customer bases.
Investment and Shareholder Returns
In 2024, American Express has maintained a strong focus on returning capital to shareholders:
| Return Metric | Value |
|---|---|
| Share Repurchases (Millions) | $1,919 |
| Dividends Paid (Millions) | $494 |
| Total Capital Returned to Shareholders (Millions) | $2,413 |
Conclusion
American Express's mission statement and operational strategies reflect its dedication to customer service and innovation, backed by robust financial performance and a commitment to shareholder value.
How American Express Company (AXP) Works
Business Model
American Express Company (AXP) operates primarily as a payment and travel services company, generating revenues through various streams including discount revenue, net card fees, and interest income from Card Member loans. As of September 30, 2024, American Express reported:
| Metric | Value (Millions) |
|---|---|
| Total revenues net of interest expense | $16,636 |
| Provisions for credit losses | $1,356 |
| Total expenses | $12,076 |
| Pretax income | $3,204 |
| Net income | $2,507 |
| Earnings per common share (diluted) | $3.49 |
Revenue Breakdown
Revenues are primarily derived from the following sources:
- Discount revenue: $26,015 million
- Net card fees: $6,204 million
- Service fees and other revenue: $3,839 million
- Processed revenue: $1,207 million
Card Member Services
American Express serves a diverse clientele, including consumers, small businesses, and corporate clients. Key statistics as of September 30, 2024, include:
| Metric | Value |
|---|---|
| Cards-in-force (millions) | 145.5 |
| Proprietary cards-in-force | 82.9 |
| Average proprietary basic Card Member spending (dollars) | $6,110 |
| Proprietary new cards acquired (millions) | 3.3 |
Financial Performance
American Express has demonstrated strong financial performance, with significant growth in various metrics:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net income (Millions) | $7,959 | $6,441 | 24% |
| Total revenues net of interest expense (Millions) | $48,770 | $44,716 | 9% |
| Earnings per share (diluted) | $10.97 | $8.59 | 28% |
Credit Losses and Write-offs
The company has reported credit performance metrics that reflect the quality of its loan portfolio:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net write-off rate (principal, interest, and fees) | 2.2% | 2.0% |
| Net write-off rate (principal only) | 1.9% | 1.8% |
| 30+ days past due as a % of total (consumer and small business) | 1.3% | 1.2% |
Balance Sheet Summary
As of September 30, 2024, American Express reported the following balance sheet metrics:
| Metric | Value (Millions) |
|---|---|
| Total assets | $270,979 |
| Customer deposits | $135,438 |
| Long-term debt | $53,546 |
| Total liabilities | $241,272 |
| Total shareholders' equity | $29,707 |
Capital Management and Shareholder Returns
American Express is committed to returning capital to its shareholders through dividends and share repurchases. In the nine months ended September 30, 2024, the company returned:
| Type | Value (Millions) |
|---|---|
| Share repurchases | $4,800 |
| Common stock dividends | $1,500 |
American Express repurchased 7.7 million common shares at an average price of $245.30 during the third quarter of 2024.
Regulatory and Compliance Status
As of 2024, American Express is categorized as a Category III bank holding company, subject to heightened capital, liquidity, and prudential requirements due to its total consolidated assets exceeding $250 billion. This categorization imposes additional regulatory scrutiny and compliance obligations.
How American Express Company (AXP) Makes Money
Revenue Streams
American Express generates revenue primarily through the following streams:
- Discount Revenue: $26,015 million for the nine months ended September 30, 2024, compared to $24,836 million in the same period of 2023.
- Net Card Fees: $6,204 million for the nine months ended September 30, 2024, compared to $5,348 million in 2023.
- Service Fees and Other Revenue: $3,839 million for the nine months ended September 30, 2024, compared to $3,711 million in 2023.
- Processed Revenue: $1,207 million for the nine months ended September 30, 2024, compared to $1,291 million in 2023.
Financial Performance Overview
For the nine months ended September 30, 2024, American Express reported:
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Total Revenues (Net of Interest Expense) | $48,770 million | $44,716 million |
| Net Income | $7,959 million | $6,441 million |
| Earnings Per Share (Diluted) | $10.97 | $8.59 |
| Card Member Loans | $134,548 million | $117,978 million |
Cost Structure
American Express's total expenses for the nine months ended September 30, 2024, were $34,738 million, compared to $33,229 million in 2023. Key components include:
| Expense Category | 2024 | 2023 |
|---|---|---|
| Card Member Rewards | $12,169 million | $11,516 million |
| Business Development | $4,249 million | $4,174 million |
| Card Member Services | $3,504 million | $2,905 million |
| Marketing | $4,426 million | $3,985 million |
| Salaries and Employee Benefits | $6,096 million | $5,936 million |
Key Financial Ratios
As of September 30, 2024, American Express reported the following key financial metrics:
| Metric | Value |
|---|---|
| Return on Average Equity (ROE) | 33.9% |
| Common Equity Tier 1 Ratio | 10.7% |
| Net Write-off Rate (Principal, Interest, and Fees) | 2.2% |
| Effective Tax Rate | 21.8% |
Market Dynamics and Growth
American Express continues to expand its market presence, with billed business growing by 6% year-over-year. Key growth drivers include:
- U.S. Consumer Services: Billed business grew by 6% year-over-year.
- International Card Services: Billed business grew by 13% year-over-year.
- Commercial Services: Billed business grew modestly by 1% year-over-year.
Shareholder Returns
During the nine months ended September 30, 2024, American Express returned $6.3 billion to shareholders through share repurchases and dividends:
| Return Method | Amount |
|---|---|
| Share Repurchases | $4.8 billion |
| Dividends | $1.5 billion |
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Updated on 16 Nov 2024
Resources:
- American Express Company (AXP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of American Express Company (AXP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View American Express Company (AXP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.