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A Look at AXP’s International Consumer and Network Services

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What to expect moving forward

American Express’s (AXP) International Consumer and Network Services segment is affected by consumer spending levels. Global macroeconomic factors, along with business activities, play a vital role, as they directly affect consumer spending patterns. However, net card fees also affect the segment’s performance.

The International Consumer and Network Services segment is expected to witness a rise in total revenue (after deducting interest expenses) mainly due to the strong US economy and the increasing trend of making payments through digital modes, which should fuel higher spending.

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However, a stronger economy will also benefit other consumer financial companies (XLF), including Discover Financial Services (DFS), Mastercard (MA), and Visa (V), moving forward. Mastercard’s management is very optimistic about the opportunities available in Europe, and it expects these opportunities to boost its performance.

Past performance

The International Consumer and Network Services segment’s net income amounted to $291 million in the first quarter, implying a rise of 15% on a YoY (year-over-year) basis. During the same period, the segment’s total revenue (after deducting interest expenses) amounted to $1.8 billion, reflecting a 12% rise on a YoY basis mainly due to rises in net card fees and spending.

The International Consumer and Network Services segment incurred total expenses amounting to $1.3 billion in the first quarter, reflecting a YoY rise of 10% mainly due to a rise in rewards expenses. The segment’s net interest income amounted to $216 million in the first quarter, implying a rise of 19% YoY.

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