Analyst Note| Michael Miller |
Wide-moat American Express reported strong fourth-quarter results, with EPS of $1.76 beating the FactSet consensus estimate of $1.31. Credit costs remained low, with net principal write-offs at 1.9% of total loans. As a result, American Express was able to release more reserves, leading to a provisioning benefit of $111 million. Even with the reserve release, American Express is well provisioned and plans to resume share repurchases in 2021. Despite good credit results, American Express’ revenue generation is challenged, with declines in both discount revenue and net interest income affecting its top line.