American Express Beats Earnings Estimates as Affluent Customers Keep Spending

American Express reported third-quarter earnings that beat analysts’ estimates. (Dreamstime)

Key Points

• American Express reports third-quarter earnings per share of $4.14 on record revenue of $18.4 billion, exceeding analysts’ estimates.
• The company’s credit card member spending increases by 9% in the third quarter, driven by affluent customers.
• American Express projects revenue growth of 9% to 10% for the full year.

American Express reported earnings per share of $4.14 on record revenue of $18.4 billion, beating Wall Street estimates for earnings of $4 on revenue of $18 billion, according to FactSet.

For the same period a year ago, the company reported earnings of $3.49.

Shares of the global payments and credit card company fell slightly in premarketing trading.

American Express benefited from higher spending among its affluent customers during the third quarter, with credit card member spend growth accelerating to 9%, according to the company. In September, it introduced new perks and increased the annual fee for its popular U.S. consumer and business Platinum cards.

“The initial customer demand and engagement exceeded our expectations, with new U.S. Platinum account acquisitions doubling compared to pre-refresh levels,” CEO Stephen J. Squeri said in a statement.

The company said it was revising its full-year guidance for revenue growth to 9% to 10% and earnings of $15.20 to $15.50 a share. Amex previously provided guidance of 8% to 10% for revenue growth and $15 to $15.50 for per-share profit.

“Looking ahead, we are confident in our growth prospects as we continue to execute our proven product refresh strategy and enhance our powerful Membership Model to deliver value for our card members, merchant partners, and shareholders,” said Squeri.

American Express reported that billed business rose 9% year over year to $421 billion. Billed business represents transaction volumes, including cash advances, on American Express payment products. The New York-based company reported customers spent more on restaurants, lodging, and airlines during the third quarter.

The company’s consumer credit metrics came in strong. The percentage of credit card loans that were 30 days or more past due was 1.4% for the quarter, unchanged from the year-ago period. Net write-offs also were unchanged from a year ago, according to the company’s earnings presentation. Consolidated provisions for credit losses—the amount of money American Express sets aside in case customers fall behind on loan payments—were $1.3 billion, compared with $1.4 billion a year ago.

Net interest income was $4.5 billion in the third quarter, up 12% year over year.

Write to Andrew Welsch at andrew.welsch@barrons.com