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American Express: Income Rise for Global Merchant Services

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Division’s income

In the first three quarters of 2017, American Express’s (AXP) Global Merchant Services division rose 7% in income compared to the same period in 2016, which mainly reflects a decline in the provision for losses.

The division’s non-interest revenues rose marginally by 1% in the first three quarters of 2017 compared to the first three quarters of 2016. That was mainly due to not much of a rise in discount revenue.

The division’s total expenses consist of marketing, rewards, cardmember services, salaries, benefits, and other operating expenses.

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Marginal rise

In the first three quarters of 2017, the Global Merchant Services division saw a marginal 1% rise in total expenses compared to the same period of 2016. That was mainly due to a decline in marketing-related expenses. These expenses fell due to fewer expenses in relation to growth plans.

The division posted salaries, benefits, and other operating expenses of $1.5 billion in the first three quarters of 2017 compared to $1.4 billion in the same period of 2016. That’s a rise of 5%.

The division posted provisions for losses of $11 million in the first three quarters of 2017 compared to $21 million in the same period the previous year.

On a TTM (trailing 12-month) basis, American Express posted returns on assets of 3%. Peers (XLF) Capital One Financial (COF), Green Dot (GDOT), and Synchrony Financial (SYF) had TTM returns on assets of 1.1%, 3.3%, and 2.4%, respectively.

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