uploads///International

AXP’s US International Card Services Impacted by Strong Dollar

By

Jan. 26 2016, Updated 1:06 p.m. ET

International Card Services

American Express’ (AXP) International Card Services’ total revenues net of interest expense fell by 5% to $1.3 billion in 4Q15, forming 15% of the company’s total revenues, as compared to $1.4 billion in 4Q14.

On a constant dollar basis, revenues rose by 6%, mainly due to higher card spending. The rising dollar continues to make a dent in the company’s international revenues.

Over the past few quarters, US companies have witnessed falls in revenue due to the strong dollar. This trend is expected to continue, as the global economy slows and the Federal Reserve considers raising rates again in 2016.

Net income for the International Card Services division rose to $73 million as compared to $33 million in 4Q14.

Article continues below advertisement

Lower expenses

As a result of the strong dollar, American Express saw a fall in total expenditure by 11% to $1.1 billion in 4Q15, as compared to $1.3 billion in the prior year’s quarter. On a constant dollar basis, expenses were down by 4% from the previous year, which included a portion of the restructuring charge.

The company’s card billed business fell by 3% in 4Q15 to $83.3 billion due to the strong dollar. On a constant dollar basis, billed business increased by 8%. Its cards-in-force increased by 5% to 60.2 million as compared to 57.3 million in 4Q14.

American Express is spending 30% of its total allocated resources on cardmember acquisition; 30% on cardmember engagement, expansion of merchant coverage, lending on charge, and international lending; 30% on other initiatives such as brand, service, technology, control, and compliance; and 10% on digital spending and its loyalty coalition business.

American Express achieved net profits of $5.2 billion in the last fiscal year. Here is how some of American Express’s peers in the payment processing industry fared with their net profits in the last fiscal year:

  • Mastercard (MA): $3.6 billion
  • Visa (V): $5.4 billion
  • Discover Financial (DFS): $2.3 billion

Together, these companies account for 1.9% of the iShares Core S&P 500 ETF (IVV).

Advertisement

More From Market Realist

  • Honeywell sign
    Earnings Report
    CNBC Pro Stocks to Buy Before Q1 Earnings
  • Men walking by Morgan Stanley headquarters
    Financials
    Morgan Stanley’s (MS) Stock Forecast Before Q1 Earnings
  • Carnival cruise ship sailing
    Consumer
    Carnival's (CCL) Stock Forecast Before Q1 Business Update
  • GameStop store
    Consumer
    GME's Earnings Are Coming: Will It Be Mayday for Shorts or WallStreetBets?
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.