American Express says spending remains strong as earnings top expectations

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Though acknowledging “mixed signals” in the economy, American Express Co. once again cited strong spending trends as the financial services giant posted better-than-expected earnings for its latest quarter.

The company logged third-quarter net income of $1.88 billion, or $2.47 a share, up from $1.83 billion, or $2.27 a share, in the year-prior quarter. The FactSet consensus was for $2.40 a share in earnings.

American Express
AXP,
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notched $13.56 billion in total revenues net of interest expense for the period, coming in above the $13.52 billion that analysts had been modeling. A year earlier, Amex recorded $10.93 billion in revenue for the third quarter.

Amex saw a 21% jump in card-member spending in the third quarter, with growth in both the goods and services and the travel and entertainment categories.

“The demand for travel has exceeded our expectations throughout the year,” Chief Executive Stephan Squeri said in an earnings release. He noted that overall spending on travel and entertainment was ahead 57% from year-earlier levels after adjusting for foreign-exchange impacts, while currency-adjusted travel and entertainment spending volumes internationally topped prepandemic levels for the first time during the third quarter.

The company added 3.3 million new proprietary cards in the quarter with record high acquisitions in U.S. consumer Platinum and Gold cards as well as U.S. business Platinum cards.

Amex disclosed $778 million in consolidated provisions for credit losses during the quarter, whereas a year earlier it saw a $191 million benefit.

The company highlighted that the change reflected a $387 million reserve build, largely driven by growth in cardholder loans and changes in economic forecasts, whereas the company saw a $393 million reserve release a year before. There were also higher net write-offs in the latest quarter.

“Our credit metrics…remained strong even as we steadily rebuild loan balances, with delinquencies and write-offs continuing to be low,” Squeri said in the release. “We have not seen changes in the spending behaviors of our customers, but we are mindful of the mixed signals in the broader economy and have plans in place to pivot should the operating environment change dramatically, as we have done in the past.”

Executives at Amex project 23% to 25% revenue growth for the full year, just as they did in the second-quarter report. They anticipate that earnings per share for the full year will come in ahead of their prior outlook range, which called for $9.25 to $9.65.



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