Credit card giant American Express on Friday reported third-quarter profit that beat expectations, helped by resilient spending from its wealthy customers who shrugged off concerns about an economic downturn.
AmEx, which caters to a premium customer base, has largely been able to mitigate the hit from inflation and the Federal Reserve’s rate hikes, which have made borrowing costly and reined in discretionary spending.
In a sign of caution, however, AmEx boosted its provisions for credit losses to $1.23 billion, up 58% from last year, to account for the increased likelihood of consumers defaulting on their debt.
“Travel and Entertainment (T&E) spending remained robust… Restaurant spending was again one of our fastest-growing T&E categories,” CEO Stephen Squeri said in a statement.
Shares of the company climbed 1% to $151.13 in premarket trading.
AmEx reported a profit of $2.45 billion, or $3.30 per share, up from $1.88 billion or $2.47 per share a year earlier. On average, analysts had expected a profit of $2.94 per share, according to LSEG IBES data.
It also said its earnings per share and revenue for the full year would be in line with the prior forecast. The company has previously said it expects to earn $11 to $11.40 per share in 2023. Analysts have been expecting it to earn $11.07, according to LSEG data.
Revenue, net of interest expense, surged 13%, to $15.38 billion.