American Express Stock Is On The High Side
- Date: 05-Apr-2021
- Source: Forbes
- Sector:Financial Markets
- Country:Middle East
American Express Stock Is On The High Side
Share to Linkedin Although the company outperformed the consensus estimates for revenues and earnings in its recently released fourth-quarter results, its revenues dropped 18% y-o-y to $9. 35 billion. It was mainly driven by an 18% y-o-y drop in non-interest revenues due to lower consumer spending levels and a decline in fees charged as a % of card transactions that take place with partner merchants (discount rate). Further, the company suffered a 17% decrease in net interest income due to interest rate headwinds. On a similar note, American Express' revenue for the full year 2020 decreased by 17% y-o-y to $36. 1 billion, primarily due to lower discount fees and a drop in net interest income. American Express is very sensitive to a change in consumer spending patterns, which directly impacts card transaction volumes and outstanding card loans. Further, AXP has co-branding card arrangements with several hotel chains and airlines. With global travel and hotel occupancy rates at the receiving end of the Covid-19 crisis due to travel bans and other restrictions, and a decrease in consumer spending due to economic slowdown, the company's top-line has suffered. However, the consumer spending levels have seen some recovery over the recent quarters.