Credit card powerhouse American Express unveiled third-quarter (Q3) profits on Friday that outperformed projections, bolstered by unwavering expenditure from its affluent clientele. Despite mounting concerns of an impending economic downturn, these consumers exhibited remarkable resilience. Analysts attribute this steadfastness to the company’s deliberate focus on a relatively affluent customer base.
Morningstar analyst Michael Miller remarked on this distinctive circumstance, noting, “The sequential resiliency of American Express’s credit metrics is a noticeable contrast to other consumer lenders, who did see continued deterioration during the quarter.”
AmEx reported credit loss provisions of $1.23 billion, marking a notable 58% increase from the previous year. However, this figure only inched up by 3% from the second quarter. Speaking to reporters, Chief Financial Officer Christophe Le Caillec affirmed, “It’s a bit of a business-as-usual quarter for us. We see a lot of demand for our products and services coming from Gen Zs and Millennials. They are also signing up for premium products.” Le Caillec also revealed that the resumption of student loan repayments in October had yet to exert any discernible impact on spending patterns.
The company’s associated profit soared to $3.30 per share, surpassing the prior year’s figure of $2.47. This notably eclipsed the anticipated average of $2.94 per share, as calculated by LSEG IBES data. American Express articulated its expectation to align with the previously stated profit and revenue targets. In aggregate, the corporation disclosed consolidated expenses of $11 billion, representing a 7% uptick, predominantly fueled by a striking surge in customer engagement costs.
Additionally, the company affirmed its steadfast commitment to the previously declared fiscal projections, foreseeing earnings per share and revenue for the full year to range between $11 and $11.40 per share in 2023.
With consumers demonstrating unwavering trust in the card company and an auspicious outlook for the future, American Express stands as an exemplar of market resilience in the face of economic adversity.
In summary, American Express unveiled impressive Q3 profits, with earnings per share reaching a solid $3.30, exceeding analysts’ projections. This feat was made possible by the unwavering spending of its affluent customer base, impervious to the economic headwinds. Morningstar’s Michael Miller highlighted the unique credit protection demonstrated by AmEx, distinguishing it from its peers. Looking ahead to 2023, the company maintains its confidence in achieving projected profits and revenue targets.