American Express is the world top leading business
global credit card firms which is targeting the huge net worth individuals.
It has one of the
highest discount rates in the peer group compared to others. Normally rising
competition may make client retention increasing difficultly. Cost management
is pivotal for the firm. Unlike Visa (V) and MasterCard (MA), the bank carries credit risk on its balance
sheet. This makes lower valuation multiples compared to these two network
companies.
In 2013 there is
better expense management but disappointingly not in the top position.
Corporate and international travel commission and fees moderated, pointing
toward lowering of corporate spending.
Revenue net of
interest expenses increased 4% YOY (+5% YOY) to USD 7.9 billion, driven by a 4%
increase in discount revenue to USD 4.4 billion, a 10% increase in net interest
income to USD 1.2 billion and 7% higher card fees. All these revenue trends
have disappointed.
Many well-paid bankers
are fans of American Express credit cards, which to some have an aura of
exclusivity - Visa or MasterCard being considered too common.
Another insurance
policies purchased via a promotion run by American Express, with payment linked
to its cards, were more expensive than comparable products