Amex calls out ‘strong’ spending and credit trends as earnings beat estimates

Total revenues net of interest expense climbed to $15.4 billion from $13.6 billion a year before and made for Amex’s
AXP,
-5.38%
sixth straight quarter of record revenue, the company said. Amex’s revenue matched the FactSet consensus.

Total network volumes increased 7% to $420.2 billion. Amex called out “strong” overall spending, as well as particular strength in travel and entertainment spending, which rose 13% and was helped by a continued interest in dining out.

Restaurant spending was one of its fastest-growing travel and entertainment categories in the third quarter.

There’s “definitely a lot of strength in our consumer numbers,” Chief Financial Officer Christophe Le Caillec told MarketWatch.

Chief Executive Stephen Squeri said in a release that the “investments we have made in our value propositions are driving brand relevance across generations, with Millennial and Gen Z consumers remaining our fastest-growing consumer cohort.” He noted that spending by those cohorts increased by 18% in the U.S. in the latest quarter.

Read: Visa’s stock has been a safe haven. But is it a risky play ahead of earnings?

Amex’s total provisions for credit losses rose to $1.2 billion from $778 million, reflective of higher net write-offs that were partly offset by a lower net-reserve build in the latest quarter. The company said it’s seeing “strong” credit metrics as net write-off rates and delinquency rates are still below prepandemic levels.

While Discover Financial and others in the industry have sounded more cautious notes on credit trends, Le Caillec said that it’s “challenging to compare what’s going on in the industry versus what’s going on at Amex” given that the company skews toward higher-end consumers.

Amex has “very limited exposure to subprime card members,” he said. “Our products are typically more premium, with more value and lifestyle benefits. That skews the portfolio toward the high end and makes our numbers a lot less volatile than the rest of the industry.”

See also: Discover shares fall on ‘sizeable’ amount of funds set aside to cover loan losses

Squeri said in the release that Amex was “well positioned as we seek to achieve our long-term growth plan aspirations in 2024 and beyond in a steady-state macro environment.”