American express Q3 2007

Overall --third largest US credit-card network --EPS 90 c/share, climbed 10%, higher than est 85 c --income form continuous op, 15% --drivers: billed business, more people replace cash and check with cards and tend to make more transactions, now 40% and would-be 56% in 2010 --international: Income from the U.S. card business was up 6% to $592 million, while that from its international-card services unit soared 32% to $140 million. --its clientele tends to be more affluent than those of rivals a.Spending by card members outside the U.S. surged 23% to $47.3 billion b.US 13% to $115.2 billion Credit metrics --provision increased to $638, 44% increase, --Cardmember provision 579 mil, 41% higher while world carmemver lending loans increased 32% to 50.5 bil, conservative --Net write-off rate, 4.1% vs 3.8% one year ago. --Alloance/NPL, all decreased across three segments (cardmember rece: 97% to 91%, owned: 106% to 97%, managed 101% to 97%) Evaluation --stock fell 24 c to $56.87 in 4pm, it gained 1.7 to 58.57 in Germany --A+, 10y increased 20 bps to 142 bps over one week, lower than 3m peak 160 bps. --5y CDS 43 bps, peak 63 bps Market comments: comments: --net charge-off increased, NPL increased, but ALL/NPL or ALL/LCO decreased. AXP tend to underreserve for loan losses, smoothing their income.