American Express has bumped up its full-year revenue growth outlook and topped Wall Street’s profit expectations for the second quarter, as its high-income cardholders kept reaching for their cards to pay for travel and meals — even amid a murky economic backdrop.
The New York-based credit card company draws a large share of its business from wealthier consumers, who tend to be in a stronger financial position to handle inflation and continue spending on non-essential purchases. That sets it apart from many competitors that serve a wider range of income levels.
Total spending on AmEx cards — a figure the company calls billed business — climbed 9% to $455.8 billion on a foreign exchange-adjusted basis. Revenue for the quarter grew 10%, reaching $19.6 billion.
CEO Stephen Squeri expressed confidence in the company’s direction, saying in a statement: “Six months into the year, we’re seeing stronger momentum than we expected. The investments we made in our value propositions have driven accelerated spend and revenue growth.”
American Express now projects full-year revenue growth of 10%, which aligns with analyst estimates compiled by LSEG. The company also held steady on its profit growth outlook.
The results give investors an early window into how affluent Americans are spending their money, ahead of earnings reports from other major card networks.
For the three months ending June 30, AmEx reported earnings of $4.53 per share, up from $4.08 per share during the same period last year. Analysts had anticipated $4.40 per share.
The company set aside $1.1 billion in credit loss reserves during the quarter, down from $1.4 billion a year ago. These so-called rainy-day funds reflect how much a lender expects it may not recover from outstanding loans — and a smaller reserve generally signals greater confidence that borrowers will continue making payments.
The results come as U.S. consumer sentiment bounced back from record lows in June, even as many households remain concerned about the ongoing high cost of living, according to the University of Michigan’s Surveys of Consumers.
