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Analyzing American Express’s Total Expenses

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Dec. 19 2017, Updated 5:00 p.m. ET

Total expenses rose

In the first three quarters of 2017, American Express (AXP) posted total expenses of $17.1 billion compared to $15.7 billion during the same period of 2016. That reflected a rise in net other expenses and expenses related to card member services and other services.

American Express’s spending on marketing and promotion has decreased to $2.3 billion in the first three quarters of 2017 from $2.4 billion in the first three quarters of 2016. That was mainly due to fewer expenses incurred on growth initiatives. The company saw a 12% rise in cardmember rewards expenses in the first three quarters of 2017 compared to the same period of 2016. That was mainly due to a rise in expenses related to membership rewards. However, it saw a fall in expenses related to co-brand rewards.

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Cardmember services

American Express witnessed a rise of 23% in cardmember services and other expenses in the first three quarters of 2017 compared to the same period of 2016, mainly due to platinum card benefits and a rise in use related to travel benefits.

It incurred salaries and employee benefit expenses of $3.8 billion in the first three quarters of 2017 compared to $4 billion in the same period of 2016. That implies more restructuring charges in 2016. In 2017, it saw advantages related to cost reduction initiatives.

On a TTM (trailing 12-month) basis, American Express has an operating margin of 24.8%. Competitors (XLF) Synchrony Financial (SYF), Green Dot (GDOT), and Capital One Financial (COF) have operating margins of 50.5%, 10.7%, and 30.5%, respectively, on a TTM basis.

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