Travel and entertainment spending on American Express cards grew 121% in the first quarter, even with variant surges. One more benefactor of the severe pent up demand to travel.
American Express Co beat first-quarter profit estimates on Friday as card spending rebounded from a year ago, eclipsing an increase in costs from higher rewards payments.
Spending rose 34% to $9.06 billion due to higher customer engagement costs, the company said, sending shares down nearly 2% in morning trading.
Senior AmEx executives, however, sought to reassure investors that the company’s strategy was paying off. AmEx added 3 million new proprietary cards, with customer acquisitions of US Consumer Platinum and Gold cards and US Business Platinum cards reaching all-time highs in the quarter.
“The whole revenue momentum…has been driven by the investments we’ve made in marketing, value propositions, coverage, technology and talent,” Chief Financial Officer Jeffrey Campbell said on a post-call. profit.
Consumer spending in the United States has increased as Americans make up for lost time traveling, shopping and dining out as pandemic restrictions ease and COVID-19 recedes from peak levels.
Despite the Omicron blow in January and early February, travel and entertainment spend on AmEx cards grew 121% on a currency-adjusted basis.
Spending on goods and services, AmEx’s largest payment category, increased 21%.
Russia, where AmEx suspended all operations in March after its neighbor Moscow invaded, and Ukraine were “very, very small markets” for the company, Campbell said in an interview with Reuters.
The remnants of the business there could at some point lead to impairment, but that wouldn’t be significant, Campbell added.
AmEx’s net income fell 6% to $2.1 billion, or $2.73 per share, for the quarter ended March 31. Analysts had expected it to be $2.44 per share, according to Refinitiv IBES data.
Total revenue excluding interest expense rose 29% to around $11.74 billion.
(Reporting by Mehnaz Yasmin and Niket Nishant in Bengaluru; Editing by Vinay Dwivedi)
This article was written by Mehnaz Yasmin and Niket Nishant from Reuters and has been legally licensed through Industry Dive Content market. Please direct all licensing questions to [email protected].