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After almost 30 years in operation, American Express has announced that it will retire its banking services in Mexico, but will continue to issue credit cards in the country.
Last week, Mexico’s National Banking and Securities Commission (CNBV) approved a request by Amex to revoke its banking licence in the country.
Amex has been offering card products in Mexico since 1963 and was granted a banking licence in 1996.
In addition to closing down its banking arm, Amex has decided to bring all of its Mexican operations under one company: the American Express Company Mexico.
“Consolidating our operation in Mexico under one legal entity, American Express Company Mexico, follows our strategy to achieve greater efficiency in our business,” an Amex spokesperson told VIXIO.
Speaking to local newspaper El Financiero, Santiago Fernández, president and CEO of Amex in Mexico, said that the decision to quit was not related to the political situation in the country.
Fernández added that it was a voluntary decision and one that the management had started to evaluate five years ago and had taken three years ago.
Amex Bank was primarily involved in order lending products in Mexico, including supporting Amex’s credit and charge card portfolio.
In preparation for the withdrawal, last year Amex migrated its credit card portfolio to a partner bank that it will be using going forward. It filed the documents to start the revocation process last October.
Fernández said the company initiated the process after evaluating various other options, including a sale. Eventually, Amex considered giving up the banking licence as the “best option” in the long term.
“Given the global brand, the goal of our strategy was to focus on the core business which is cards,” he said.
Fernández added Amex will now continue to “focus on its digital transformation, contributing to the local economy”.
“We are very excited about the future of our organisation in the country,” he said.
Amex reports fifth quarter in a row of record revenues
Outside Mexico, Amex’s retreat does not appear to have affected the company’s strong financial position, according to its latest earnings report.
Last week, Amex’s published its Q2 2023 earnings, showing record revenue of $15.1bn, up 12 percent compared with the previous year.
Stephen Squeri, chairman and CEO of Amex, said the fifth straight quarter of record revenues “demonstrates the continued strength of our differentiated business model”.
In Q2, Amex saw an all-time high in consumer and international card member spending, while travel and entertainment spending remained strong across customer categories and geographies.
Amex also saw strong demand for its premium products, with more than 70 percent of the new Amex accounts opened in the last quarter being fee-based.
Millennial and Gen Z consumers remained its fastest-growing customer segment, representing more than 60 percent of new consumer accounts acquired by Amex globally in the quarter, and spending by this cohort increased 21 percent over the prior year in the US.
“Based on our results to date, we are reaffirming the full-year 2023 guidance we provided in January for revenue growth of 15 percent to 17 percent and EPS [earning per share] of $11.00 to $11.40,” the company said.
