AMERICAN EXPRESS REPORTS SECOND QUARTER EPS OF $0.84, UP SIGNIFICANTLY FROM A YEAR AGO
(Millions, except per share amounts)
Quarters Ended
June 30, Percentage Six Months Ended June 30,
Percentage 2010 2009 Inc/(Dec) 2010 2009 Inc/(Dec)
Total Revenues Net of Interest Expense(1) $ 6,858 $ 6,092 13 % $ 13,464 $ 12,018 12 %
Income from Continuing Operations $ 1,017 $ 342 # $ 1,902 $ 785 #
Loss From Discontinued Operations $ - $ (5 ) # $ - $ (11 ) #
Net Income $ 1,017 $ 337 # $ 1,902 $ 774 #

Earnings Per Common Share - Diluted:
Income From Continuing Operations
Attributable to Common Shareholder(2) $ 0.84 $ 0.09 # $ 1.57 $ 0.41 #
Loss From Discontinued Operations $ - $ - - $ - $ (0.01 ) #
Net Income Attributable to Common
Shareholders(2) $ 0.84 $ 0.09 # $ 1.57 $ 0.40 #

Average Diluted Common Shares
Outstanding 1,197 1,165 3 % 1,194 1.161 3 %
Return on Average Equity 23.5 % 13.2 % 23.5 % 13.2 %
Return on Average Common Equity 23.2 % 12.0 % 23.2 % 12.0 %
# Denotes a variance of more than 100%
(1) Refer to discussion regarding revenue drivers on page 2 of earnings release.
(2) Represents income from continuing operations or net income, as applicable, less (i) accelerated preferred dividend accretion of $212 million for the three and six months ended June 30, 2009 due to the repurchase of preferred shares from the U.S. Treasury Department, (ii) preferred shares dividends and related accretion of $22 million and $94 million for the three and six months ended June 30, 2009, and (iii) earnings allocated to participating share awards and other items of $13 million and $1 million for the three months ended June 30, 2010 and 2009, respectively, and $25 million and $5 million for the six months ended June 30, 2010 and 2009, respectively.



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NEW YORK, July 22, 2010 -- American Express Company (NYSE: AXP) today reported second-quarter net income of $1 billion, up from $337 million a year ago. Diluted per share net income was $0.84, up from $0.09 a year ago. The year-ago results include a per share reduction of $0.18 from a repurchase of preferred shares from the U.S. Department of the Treasury.

Consolidated total revenues net of interest expense were $6.9 billion, up 13 percent from $6.1 billion a year ago. The increase was the result of the consolidation of securitized cardmember loans and related debt onto the balance sheet in the first quarter(3). Revenues also reflect higher cardmember spending, offset by a smaller loan portfolio and lower yields on both the securitized and non-securitized portions of the portfolio.

Consolidated provisions for losses totaled $652 million compared to $1.6 billion in the year-ago period, reflecting continued improvement in credit quality for the charge and credit card portfolios(3).

Consolidated expenses totaled $4.6 billion, up 13 percent from $4.1 billion a year ago, reflecting higher investment in business building initiatives and higher rewards costs.

The company's return on average equity (ROE) was 23.5 percent, up from 13.2 percent a year ago. Return on average common equity (ROCE) was 23.2 percent, up from 12 percent a year ago.

"Cardmember spending rose 16 percent and improved credit indicators continued the year-long trend that began last spring," said Kenneth I. Chenault, chairman and chief executive officer.

"Spending rose across all segments with the largest increases coming from corporate cards, cards issued by our bank partners, charge cards and premium co-brand products where many cardmembers tend to pay in full each month.

"While the economic environment remains uneven, our net income and billed business are back at, or near, their pre-recession levels. Some of the year-over-year improvement represents an initial return on our investments in the business, but the large percentage increases also reflect comparisons with last year’s recessionary levels.

"While spending among affluent consumers and businesses remains strong, today’s cardmembers are borrowing less and paying down more of their outstanding debt. Over the last several quarters, this has translated into lower interest revenue.

"We remain focused on charge – or pay-in-full - products, fee-based revenues, and on expanding our high quality cardmember base. In all, these factors have helped to improve our risk profile during the past year.

"We remain cautious about the economy and the challenging regulatory environment. We also recognize that the grow-over comparisons will be more difficult in the second half. Nonetheless, there are significant opportunities to build on the momentum of the last year. We plan to maintain our investments in the business at substantial levels, and dedicate resources to select partnerships and acquisitions."

Year-ago results included $182 million ($118 million after-tax) of net reengineering charges and a $211 million ($135 million after-tax) gain on the sale of a portion of the company’s equity holding in Industrial and Commercial Bank of China (ICBC).

The effective tax rate of 36 percent for the second quarter of 2010 includes the impact of a $44 million tax-related charge.

more info on
http://home3.americanexpress.com/corp/pc/2010/2Q10.asp