American Express Reports Higher Revenue and Profit in Q3

American Express has announced its financial results for the third quarter, revealing higher revenue and profit driven by strong spending by its cardholders. Here are the key details:

Earnings

The credit card company recorded a profit of $2.45 billion, or $3.30 per share, compared to $1.88 billion, or $2.47 per share, in the same period last year. Analysts surveyed by FactSet had estimated earnings of $2.95 per share.

Revenue

Revenue increased by 13% to $15.38 billion, surpassing analysts' expectations of $15.36 billion.

Key Observations

Spending

• Cardholder spending witnessed a 7% growth, with a significant contribution from a 9% increase by U.S. consumer cardholders and a 15% rise from international card services (adjusted for foreign exchange).
• Chief Executive Stephen Squeri highlighted that spending on travel and entertainment played a crucial role in boosting the overall volume, which saw a 13% rise on an FX-adjusted basis.
• The company's Resy restaurant-booking platform achieved record-breaking reservations during the quarter.

Credit Health

• American Express reported that its customers' credit metrics remain strong, with net write-offs and delinquency rates for card member loans and receivables still below pre-pandemic levels.
• However, the company set aside $1.2 billion for credit losses, compared to $778 million in the same period last year, indicating higher net write-offs.

Stock Performance

American Express shares surged over 2% to reach $153 in premarket trading following the announcement. As of the market close on Thursday, the stock has shown a year-to-date increase of approximately 1%.