American Express Reports Decent Third-Quarter Results, but Growth Decelerates From Second Quarter

Wide-moat American Express reported decent third-quarter results as it continues to benefit from a growing cardholder base and more average spending per card. Net revenue rose 24% year over year and 1.2% sequentially to $13.56 billion, with the slow sequential growth standing out. Earnings per share growth was more muted, at 9% to $2.47. Bottom-line results were affected by a $778 million provisioning expense versus a $191 million benefit last year. We see the increase in credit reserves as a return to normal provisioning behavior, not a sign of sudden credit deterioration, as write-offs remain well below normal levels. As we incorporate these results, we do not plan to materially alter our $166 fair value estimate.