Key Metrics
- Revenue:
- Total Revenues Net of Interest Expense: $16,636 million (8% yoy)
- Non-interest Revenues:
- Discount Revenue: $8,780 million
- Net Card Fees: $2,170 million
- Service Fees and Other Revenue: $1,267 million
- Processed Revenue: $413 million
- Net Interest Income: $4,006 million (16% yoy)
- Provision for Losses:
- Total Provisions for Credit Losses: $1,356 million (10% yoy)
- Billed Business (FX-adjusted y/y):
- Total Billed Business: $387.3 billion (6% yoy)
- US Consumer: $162.3 billion (6% yoy)
- Commercial Services: $131.0 billion (1% yoy)
- International Card Services: $93.6 billion (13% yoy)
Forward guidance
- EPS Guidance: Full-year EPS guidance raised to $13.75 - $14.05, reflecting 23% to 25% year-over-year growth.
- Revenue Growth: Full-year revenue growth expected around 9%, consistent with initial guidance.
- Card Fee Revenue: Net card fees increased 18% year-over-year, driven by product refreshes.
- Marketing Spend: Full-year marketing spend projected at approximately $6 billion for 2024.
- Operating Expenses: Full-year operating expenses expected to remain flat year-over-year, adjusting for the Accertify gain.
- Lending Growth: Continued upward momentum in lending anticipated, with a focus on premium card members.
- Billings Growth: An acceleration in billings growth is necessary to achieve aspirational revenue growth of 10%.
Key takeaways
- Positives:
- "We had another strong quarter that reflects the steady earnings power of our business model," indicating robust operational resilience and consistent revenue generation.
- The product refresh strategy is yielding results, with "total US Consumer Gold acquisitions... running at about 30% higher than Platinum," showcasing effective targeting of Millennial and Gen-Z demographics.
- Dining spending is a key growth area, with a 7% increase in restaurant spending, "growing at nearly twice the industry rate overall since 2019," highlighting a strategic focus on high-demand categories.
- "Transaction engagement is deepening," with a 9% increase in transactions, suggesting strong customer loyalty and engagement.
- EPS guidance raised to $13.75-$14.05, reflecting confidence in sustained growth despite a challenging macroeconomic backdrop.
- Negatives:
- "We would need to have an acceleration in building," indicating that current billing growth of 6% is insufficient to meet long-term revenue aspirations of 10%.
- "Organic spending... is not as robust as it was in a more robust environment," suggesting potential headwinds in consumer spending that could impact future growth.
- "The spend environment has been stable... but softer," indicating a cautious outlook on consumer behavior amid economic uncertainties.
- "We expect to see a slight uptick in Q4," which may imply that operational challenges persist, potentially affecting overall performance.
- "The discount rate in international is lower than in the US," which could pressure revenue growth as international markets expand.
Peer Summary
- Consumer Demand Softening: Discover Financial Services noted a "3% decline in Discover card sales, attributed to cautious consumer behavior and credit tightening actions," indicating a potential trend of reduced consumer spending across the sector.
- Credit Quality Concerns: Capital One highlighted "delayed charge-offs from the pandemic period," suggesting lingering vulnerabilities in consumer credit that could affect future performance.
- Operational Pressures: Bank of America reported "line of credit usage rates remain lower than pre-pandemic levels," reflecting cautious behavior among consumers and businesses, which may impact credit card usage.
- Interest Rate Sensitivity: JPMorgan Chase mentioned "deposit margins are under pressure," indicating challenges in maintaining profitability amid fluctuating interest rates, which could affect lending dynamics.
- Regulatory Challenges: Citigroup acknowledged "increased investments in areas where we have not made sufficient progress," suggesting that regulatory scrutiny may impose additional operational burdens across the sector.