April 23 (Reuters) – American Express sailed past Wall Street expectations for first-quarter profit on Thursday, as the credit card giant’s affluent customers spent on travel and discretionary purchases.
Elevated interest rates and concerns about inflation spiking due to higher gasoline prices dominate the backdrop, but AmEx’s business is more insulated thanks to the financial flexibility of its largely wealthy customer base.
Billed business, a measure of total spending on AmEx cards, rose 9% to $428 billion, on a foreign exchange-adjusted basis. Its revenue rose 10% to $18.9 billion in the quarter.
AmEx shares were last up 1.2% in premarket trading after results.
American Express has in recent years stepped up investments in marketing, digital capabilities and rewards programs to attract younger Gen Z customers as long-term cardholders.
“Card Member spending grew 9% FX-adjusted, the highest quarterly growth in three years, driven by strong demand and engagement with our premium products,” CEO Stephen Squeri said in a statement.
The company’s profit came in at $4.28 per share in the three months ended March 31. That compares with $3.64 per share a year earlier. Analysts on average had expected $4.02, according to estimates compiled by LSEG.
AmEx’s results are closely watched as they offer an early read on spending trends for the quarter at U.S. card firms.
Strong AmEx results signal that luxury and high-end buyers are continuing to spend in the current environment, easing concerns for retailers and consumer goods companies catering to that segment.
The company set aside $1.3 billion in consolidated provisions for credit losses in the quarter, compared with $1.2 billion a year ago.
Provisions serve as an indicator of credit performance and the economic outlook, with higher provisions typically signaling that a lender is building a cushion against potential loan losses if customers come under pressure and default.
(Reporting by Manya Saini in Bengaluru; Editing by Devika Syamnath)
