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American Express posts higher Q3 net income YOY, raises FY'18 guidance

American Express Co. reported third-quarter net income attributable to common shareholders of $1.65 billion, or $1.88 per share, compared with $1.36 billion, or $1.51 per share, in the year-ago period.

The S&P Global Market Intelligence consensus normalized EPS estimate was $1.77.

Third-quarter earnings were bolstered by a drop in the company's effective tax rate, which fell to 22% from 26%. But revenues were also stronger on a year-over-year basis. Total revenues, net of interest expense, came in at $10.14 billion, compared with $9.29 billion in the same quarter of 2017.

Consolidated provisions for losses were $817 million, 6% higher than the $770 million in the year-ago period. American Express said the increase reflected growth in loans and an increase in write-offs, moderated by stable delinquency rates.

American Express' global consumer services group, which issues a wide range of proprietary consumer cards globally, reported third-quarter net income of $779 million, compared with $680 million in the year-ago quarter. Total segment revenues, net of interest expense, rose to $5.4 billion, versus $4.9 billion in the year-ago period, reflecting higher loans and an increase in write-offs, moderated by stable delinquency rates. Provisions for losses were $609 million, up from $568 million in the third quarter of 2017.

Global commercial services reported segment income of $606 million, up from $505 million in the same quarter in 2017. Global merchant and network services reported segment income of $580 million, up from $420 million in the year-ago period. The corporate and other segment reported a net loss of $311 million, compared with a net loss of $246 million in the third quarter of 2017.

American Express has increased its full-year EPS outlook to between $7.30 and $7.40, up from previously issued guidance of between $6.90 and $7.30.

The S&P Capital IQ consensus normalized EPS estimate for 2018 is $7.29.