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American Express in Q2: Drivers Could Be Loan Growth, Spending

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American Express’s earnings in Q2 2018

On July 18, American Express (AXP) is expected to report its second-quarter earnings. Analysts expect its EPS to be $1.82 compared to $1.86 in the first quarter. The second-quarter EPS reflects a YoY (year-over-year) growth of 23.8%.

American Express is seeing a dip in corporate loan demand amid fears of declining global trade and rising conflicts. That’s expected to be largely offset by an expected growth in billed business due to acquisitions over the past year and rising wages. Its competitor (IYF) Capital One Financial (COF) might also see the impact of a lower corporate loan demand.

Discover Financial Services’ (DFS) second-quarter results could mainly be aided by higher retail loans. Mastercard (MA) might be helped by higher oil prices and stronger spending.

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Revenues in Q2 2018

Analysts expect American Express to report revenues of $10.1 billion in the second quarter, which implies a YoY growth of 21.1%. The primary drivers could be higher discount revenues and higher interest income. At the end of the first quarter, the domestic market contributed 30% of the company’s billings. In the second quarter, a boost in loans and spending might help the company’s U.S. Consumer Services segment.

In the first quarter, Global Commercial Services accounted for 41% of American Express’s billings. This segment could see a negative impact in the second quarter due to uncertainty in the business environment, weaker Chinese markets, and an expected hit on global trade.

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