AmEx Profits Outperform Expectations As Card Spending Rises

Card spending surged from last year, dwarfing a cost increase owing to higher reward payouts, as American Express Co beat first-quarter profit projections.

The business said expenses jumped 34 per cent to $9.06 billion due to higher customer engagement expenditures, sending shares down about 2% in morning trading.

AmEx’s top executives, on the other hand, tried to convince investors that the company’s plan was working. AmEx added 3 million new proprietary cards in the quarter, with customer acquisitions of the U.S. Consumer Platinum and Gold cards and the U.S. Business Platinum card achieving all-time highs.

“All of the revenue momentum … was driven by the investments we’ve been making in marketing, value propositions, coverage, technology and talent,” Chief Financial Officer Jeffrey Campbell said on a post-earnings call.

As pandemic restrictions loosen and COVID-19 levels decline, consumer spending in the United States has increased as Americans make up for lost time commuting, shopping, and dining out. find out more

Despite the Omicron dip in January and early February, FX-adjusted travel and entertainment expenditure on AmEx cards increased by 121 per cent.

Goods and services spending, AmEx’s largest payment category, increased by 21 per cent in the period.

In an interview with Reuters, Campbell claimed that Russia and Ukraine were “extremely modest markets” for AmEx, which had ceased all operations in March following Moscow’s invasion of its neighbour.

Campbell indicated that leftovers of the business might result in a writedown at some point, but it would not be significant.

For the quarter ended March 31, AmEx’s net income fell 6 per cent to $2.1 billion, or $2.73 per share. According to Refinitiv IBES statistics, analysts projected it to be $2.44 per share.

Total revenue, excluding interest costs, increased by 29 per cent to $11.74 billion.

(Adapted from BusinessTimes.com.sg)

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