American Express Stock Is On The High Side

SectorFinancial Markets
CountryMiddle east

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 more...