Card fees brought in more than $2 billion for American Express Co. for the first time in the second quarter. This was the 24th straight quarter of double-digit growth from card fees.
“A super important metric for us,” said Chief Financial Officer Christophe Le Caillec, “the fact that we made over $2 billion in card-fee revenue. It means that people are buying into the value proposition and renewing their membership.”
In the second quarter, Amex AXP, -2.74% saw “a lot of stability” in spending trends. Customers from the United States who travelled abroad and younger cardholders in general did especially well, he said.
According to Le Caillec, Millennial and Gen-Z cardholders spent 13% more than a year ago and use their cards more often than older customers. Part of the reason for this is that younger people don’t carry as much cash and are more used to using credit cards for small purchases than older people.
In the most recent quarter, Amex bought 3.3 million new cards. That’s why he said, “We want to keep putting money into marketing.” “We want to keep this wheel turning and get more and more customers.”
A year ago, Amex spent $5.2 billion on marketing. In 2024, that amount could go up to about $6 billion. The company raised its profit forecast for the whole year, even though it spent more on marketing.
Earnings per share for the whole year were raised by Amex from $12.65 to $13.15 to $13.30 to $13.80. The company stuck to its prediction that sales would grow by 9% to 11%.
Leader Stephen Squeri said in a press release, “Because our core business is doing so well, we think we can increase our marketing spending by about 15% over last year without using any of the transaction gain and still have great earnings this year.” “Because of this, we’ve decided to add the whole gain to the bottom line.”
Amex made money when it sold Accertify in the second quarter. This is shown by the transaction gain.
Overall, Amex made $3.02 billion, or $4.15 per share. This is more than the $2.17 billion, or $2.89 per share, it made during the same time last year. When the 66 cents a share of transaction gains from the sale of Accertify are taken out, Amex’s EPS is $3.49. It was expected by analysts that adjusted EPS would be $3.24.
Net of interest costs, revenue for the period was $16.3 billion, up from $15.0 billion the previous year. This is 8% growth or 9% growth when currency is taken into account. But analysts whose work was tracked by FactSet thought the company would make $16.6 billion.
Before the market opened, Amex shares were down about 2%.
In the second quarter, billed business went up 5%, or 6% after currency changes. That was less than the 6% growth, or 7% growth when currency was taken into account, that Amex saw in its first quarter.
Le Caillec said that restaurant spending was up 8% in the second quarter and that sales from U.S. cardholders abroad as a whole went up 11%. Customers in the U.S. as a whole saw growth of only 6%. He said this shows “the premiumness of our portfolio and the confidence of our cardmembers in travelling overseas and spending overseas.” He also said that it could mean that the U.S. dollar is strong.
Amex said it had set aside $1.3 billion for credit losses, which is more than the $1.2 billion it had set aside the previous year. The business had more net write-offs. but a smaller buildup of reserves than the same time last year.
He said that the company’s write-off rate of 2.1% “is a good indicator of what to expect in the next few years.”
He went on, “That’s what gives us the confidence to say, okay, let’s keep investing and growing this company like we’ve been doing—because it’s working so well for us.”
