Card-billed business for American Express Global Commercial
Services, the division that houses corporate cards, increased 5 percent year
over year in the second quarter to $109 billion. GCS card billed business
increased 4 percent to $211.9 billion for the first half of the year, compared
to the same period in 2016, and cards in force increased 3 percent year over
year to 13.8 million.
GCS net income decreased 13 percent year over year both for
the second quarter, to $500 million, and for the first half of the year, to
$918 million. As in past quarters, Amex attributed the decrease to the loss of
the U.S. Costco co-branded portfolio of cards, which sold to Citi in June 2016.
Spend among large clients grew more slowly than for clients
with less than $300 million in annual revenue, CFO Jeff Campbell said. "As
we've said for
a while now, we expect the large and global client segment to remain slower
growth rates as corporations look to manage their travel and entertainment
expenses."
Total expenses for the GCS segment increased 15 percent year
over year to $1.6 billion, reflecting higher rewards for card members once
again related to "product enhancements," according to Amex.
To grow the GCS segment, Amex intends to grow its roster of small
and midsize clients and "further penetrate commercial payments," according
to a presentation to investors.
While Amex's discount rate, the rate merchants pay Amex per
transaction, increased by one basis point year over year to 2.4 percent in the
second quarter, Campbell expects it to decrease in the second half of the year
owing to "ongoing merchant negotiations in regulated markets like
Australia and Europe and the continued rollout of OptBlue," Amex's small
business acquiring program.
Across
Amex's full portfolio, second-quarter net income decreased 33 percent year over
year to $1.3 billion, owing to the loss of the U.S. Costco portfolio. Campbell
said the company is still on track to remove $1 billion from its cost base by
the end of the year.