(Reuters) -American Express Co on Friday reported a higher profit that topped Wall Street estimates for the fourth straight quarter, underpinning a recovery in spending from consumers emboldened by an easing of COVID-19 restrictions.
The company’s shares were up 2% at $180.78 in premarket trading and were set to open at a record high.
After months of seeing a stagnation in spending, credit-card issuers like AmEx are starting to see a turnaround with resumption of social activities made possible by a rise in the number of fully-vaccinated people.
Net income came in at $1.83 billion, or $2.27 per share, for the quarter ended Sept. 30, up 70% from last year. Analysts were expecting a figure of $1.80 per share, according to IBES data from Refinitiv.
AmEx said the growth was driven by higher spending on goods and services (G&S) by consumers and small businesses, and by its millennial and Gen Z customers.
Spending on travel and entertainment (T&E) in the quarter more than doubled from last year, with restaurant spending growing above pre-pandemic levels as restrictions were eased and more people ventured out of their homes, the company said.
The New York-based company released $393 million of reserves in the quarter, reflecting an improved credit outlook overall.
Net interest income, a metric that measures how much credit card companies make from interest payments, rose 6% to $1.99 billion.
Excluding interest expense, the company’s total revenue rose 25% to around $10.93 billion.
Last week, JPMorgan Chase & Co and Citigroup Inc also reported a jump in spending on their credit cards in the United States. However, due to unprecedented government stimulus, a pickup in spending did not translate into bumper profits from their card business, as consumers flush with cash paid off their bills every month, thereby avoiding interest payments or late fees.
(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)
