American Express announced that its profits for the second quarter grew 8% compared to the same time last year, fueled by increased spending among cardholders, a drop in missed payments, and a surge in new customers choosing its high-end products like the Platinum Card and Gold Card.
The New York-based financial company reported earnings of $3.11 billion, or $4.53 per share, for the quarter. That compares to $2.89 billion, or $4.08 per share, during the same quarter a year ago. The results came in ahead of what analysts had predicted — Wall Street had expected the company to post a profit of $4.40 per share, according to FactSet.
The company continues to benefit from global economic growth that has largely favored wealthier consumers, which aligns well with American Express’s customer base. Its cardholders tend to use their cards for nearly all purchases and pay off their balances in full each month. During the quarter, the average cardholder spent $6,759, up from $6,393 during the same period the previous year.
However, the company is also facing stiffer competition from rival premium credit card offerings from other major financial institutions. To stay competitive, American Express increased its quarterly expenses by 12% year over year, directing more money toward marketing efforts and updates to its card products.
While the company raised its revenue expectations for the full year, it kept its profit outlook unchanged, citing plans to invest more heavily in attracting new customers and expanding its marketing reach. The company also indicated it will increase spending on technology, including artificial intelligence, in line with many other large corporations.
Those investments appear to be producing results. American Express added 3 million new customers during the second quarter alone, and three out of four of those new cardholders signed up for a card that carries an annual fee.
