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.
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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.
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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.
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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.
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