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How American Express’s Global Commercial Services Performed

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Dec. 20 2017, Updated 10:32 a.m. ET

Interest expenses

The Global Commercial Services division of American Express (AXP) posted total revenues, after the deduction of interest expenses, of $7.6 billion in the first three quarters of 2017 compared to $7.3 billion in the first three quarters of 2016.

The division saw a rise of 1% in net interest income in the first three quarters of 2017 compared to the same period of 2016, mainly reflecting an upward momentum in average cardmember loans and yields. However, the division saw a rise in interest expenses on the back of cost of funds.

American Express has a book value per share of $24.21. Competitors (XLF) Synchrony Financial (SYF), Green Dot (GDOT), and Capital One Financial (COF) have book values per share of $18.40, $14.61, and $94.44, respectively.

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Decline in expenses

The Global Commercial Services division saw a rise of 9% in total expenses in the first three quarters of 2017 compared to the same period in 2016. That primarily reflects a rise in marketing, rewards, cardmember services, and other expenses. These expenses rose due to a rise in cardmember rewards expenses and a fall in marketing and promotion expenses.

The division posted a provision for losses of $556 million in the first three quarters of 2017 compared to $433 million in the same period of the previous year.

The division also saw a marginal 1% rise in salaries, benefits, and other operating expenses in the first three quarters of 2017 compared to the same period in 2016.

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