Why American Express’s Total Expenses Rose in 3Q17



Total expenses rose

American Express (AXP) incurred total expenses of $5.8 billion in 3Q17 compared to $5.5 billion in 3Q16, which reflects a 6.0% rise. The company’s major components of total expenses include expenses for cardmember services, cardmember rewards, marketing, and total operating expenses.

The company’s expenses related to marketing and promotion fell from $930.0 million in 3Q16 to $814.0 million in 3Q17, a 12.0% fall.

Its total cash per share was $34.57. Consumer financial companies (XLF) Capital One Financial (COF), PayPal Holdings (PYPL), and Fidelity National Information Services (FIS) had total cash per share of $15.47, $7.62, and $2.37, respectively.

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Cardmember rewards

American Express has seen a rise in expenses related to cardmember rewards, from $1.6 billion in 3Q16 to $1.9 billion in 3Q17, reflecting a substantial rise of 21.0%. The rise was mainly due to the company’s Delta portfolio. However, the company has made certain advancements related to its US platinum products, which has also contributed to the rise in rewards expenses.

The company also saw a substantial rise of 31.0% in expenses related to cardmember services, from $278.0 million in 3Q16 to $363.0 million in 3Q17. Top management remains positive in this category and plans to make further investments.


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