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Understanding the Trend in American Express’s Total Expenses

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Amex’s total expenses

American Express (AXP) incurred total expenses amounting to $6.9 billion in the first quarter, implying a rise of 9% on a YoY (year-over-year) basis.

The company incurred marketing and business-development expenses amounting to $1.34 billion in Q1 2018 compared to $1.28 billion in Q1 2017, reflecting a rise of 5%.

Amex incurred cardmember rewards expenses amounting to $2.34 billion in Q1 2018 compared to $2.06 billion in Q1 2017, reflecting a rise of 14% YoY.

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Cardmember services and other expenses

American Express incurred cardmember services and other expenses amounting to $409 million in Q1 2018 compared to $317 million in Q1 2017, reflecting a rise of 29% on a YoY basis. This rise was witnessed mainly due to benefits associated with travel and the use of the Platinum card. These expenses are expected to rise moving forward in 2018 mainly due to an increase in travel.

Amex’s salaries and employee benefits expenses amounted to $1.3 billion in Q1 2018, while in Q1 2017, they amounted to $1.3 billion, implying a rise of 5%. The rise was witnessed mainly due to increased incentive compensation as well as payroll expenses. The company saw a fall of 9% in professional services expenses in the first quarter on a YoY basis.

Amex’s competitor Discover Financial Services (DFS) is expected to witness a rise in operating expenses moving forward into 2018, as it has plans to make deployments. Visa (V), Mastercard (MA), Discover, and American Express account for a combined 1.9% of the Vanguard Total Stock Market ETF (VTI).

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