Analyzing American Express’s Global Merchant Services Division
Net interest income
American Express’s (AXP) global merchant services division’s income rose 9% between 1H16 and 1H17, from $730 million to $793 million. This rise was due to the division’s marketing, promotion, and other expenses falling.
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In 1H16, the division incurred marketing, promotion, and other expenses of $116 million, compared with $69 million in 1H17, reflecting a substantial 41% fall. This fall was mainly due to higher expenses incurred on several growth initiatives. In 1H16, the division incurred total expenses of $1.1 billion, and in 1H17, the division managed to reduce them to $977 million, which reflects a 9% fall.
However, the division’s net interest income rose between 1H16 and 1H17. The division saw net interest income of $121 million in 1H16 and $124 million in 1H17, reflecting a 2% rise.
American Express has a market capitalization of $76.6 billion. Other consumer financial players’ (XLF) market caps are as follows:
- PayPal Holdings (PYPL): $74.6 billion
- Total System Services (TSS): $12.4 billion
- Capital One Financial (COF): $38.8 billion
In the next part, we’ll look at what to led to American Express’s total expenses rising.