Card-billed business for American Express Global Commercial
Services, the division that houses corporate cards, increased 10 percent year
over year in the third quarter to $109.7 billion, thanks to higher cardholder
spending. For the nine months ending Sept. 30, GCS card-billed business
increased 6 percent to $321.5 billion, compared with the same period last year. Total
cards in force increased 2 percent to 13.9 million.
New Amex President & CEO Steve Squeri’s Plan
“You can’t seize the future if you’re stuck waiting for the
past,” Steve Squeri said after he listed the items he’ll focus on once he becomes CEO of American Express in February:
- Strengthen Amex’s lead in the premium consumer
space by continuing to deliver personalized benefits to customers, expand
Amex’s closed-looped data advantage and its roster of business partners around
the world, and build on its premium lending portfolio through broader
relationships with existing customers.
- Expand Amex’s footprint in the commercial
payment space globally by leveraging and investing in its global footprint and
commercial capabilities. Continue to focus on small and midsize enterprises
globally by expanding existing products and services.
- Continue to be part of customers’ digital lives
by expanding digital partnerships and target acquisitions.
- Aim to become a more innovative network by
leveraging its integrated business model to help merchants navigate the
convergence of the online and offline shopping experience with improved fraud
protection, marketing insights and digital connections to higher spending card
members.
- Offer expanded products and services to the
Global Network Services department partners.
Third-quarter GCS net income increased 14 percent year over
year to $529 million. Over the first three quarters combined, however, GCS net income
decreased 5 percent year over year to $1.4 billion. Expenses in the third
quarter increased 3 percent year over year to $1.6 billion, while expenses for
the nine months so far in 2017 increased 9 percent year over year to $4.9
billion.
GCS represents 40 percent of Amex’s total billings volume
for the quarter. The U.S. small and midsize enterprise segment, which
represented 25 percent of Amex’s total billings, grew 10 percent year over year
in the third quarter on a foreign exchange-adjusted basis. Large and global
corporates, which accounted for 10 percent of Amex’s total billings, increased
5 percent year over year in the third quarter. “We expect [the large and global
corporate] segment to show more modest growth rates [going forward],” Amex CFO
Jeff Campbell said during an earnings call with investors.
While the international small and midsize enterprise
segment represents only 5 percent of Amex’s total billings, it had the highest
growth rate, at 15 percent year over year in the third quarter, on a foreign
exchange-adjusted basis. This segment is one Steve
Squeri, who will succeed Ken Chenault as president and CEO in February, will
continue to focus on when he takes over next year.
“We’ll look to extend our leadership in the commercial
payment space globally by leveraging and investing in our unmatched global
footprint and commercial capabilities,” Squeri told investors during a
conference call. “We’ll continue our emphasis on the small and midsize
business globally by expanding our existing products and services to help them
fund and grow their businesses.”
Across Amex’s full portfolio, third-quarter net income
increased 19 percent to $1.4 billion year over year, reflecting higher
net interest income and cardholder spending, which was partially offset by a
lower discount rate, according to Amex. The card network’s discount rate, the
rate merchants pay Amex per transaction, declined to 2.42 percent in the third quarter compared with 2.47 percent a year ago. The decline came from Amex’s small
business-acquiring program, OptBlue, and from merchant negotiations in regulated international
markets, according to Amex.