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American Express Global Commercial Services: What Could Impact It

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Jun. 25 2018, Updated 4:50 p.m. ET

Performance in Q1 2018

American Express’s (AXP) Global Commercial Services segment’s non-interest revenues rose 9% YoY (year-over-year) in the first quarter. It rose 13% YoY basis in the card billed business. The segment’s net interest income in the first quarter was $206 million, which reflects a YoY rise of 5%.

In the first quarter, Global Commercial Services’ interest income rose 18% YoY, while its interest expenses rose 39% YoY. The segment’s performance is primarily dependent on the global business environment. Any disturbance could negatively impact its performance.

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What’s ahead for Global Commercial Services segment?

Moving forward, the Global Commercial Services segment could see negative impacts from trade wars that could disrupt the trade environment and impact spending levels. The segment’s billed business is expected to see negative impacts that could affect its discount revenue.

Disturbances in the global business environment are expected to impact payment processing companies (IYF) Visa (V) and Mastercard (MA). American Express’s competitor Capital One Financial’s (COF) commercial banking business could also see negative impacts from disturbances in the business environment.

American Express’s Global Commercial Services segment could also see a decline in its corporate loan demand, mainly due to the new tax act that reduced corporate taxes.

Next, let’s look at American Express’s International Consumer and Network Services segment.

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