American Express Co. (NYSE: AXP) slumps over 1.5% to $162.50 per share in pre trading on Thursday as The business’s network spending growth unexpectedly rose in the first quarter, despite the bank setting aside more money to cover soured loans, hurting on profit.
Chairman and CEO of firm, Stephen J. Squeri Stated that their first-quarter results reflect strong growth in Card Member spending and continued high engagement with their premium products.
He added that the revenue of firm increased 22 percent year on year to set a quarterly record, while Card Member spending increased 16 percent on an FX-adjusted basis. Travel and entertainment expenditure grew 39 percent on an FX-adjusted basis, and it’s witnessed a record number of reservations made on Resy restaurant network in March. Company also experienced an increase in expenditure in its International Card Services category, which grew 29 percent when adjusted for currency fluctuations. Global spending on goods and services increased by 9% when adjusted for currency fluctuations.
During the quarter, firm acquired 3.4 million new cards, including record levels of U.S. Consumer Platinum and Gold, U.S. Business Platinum, and Delta co-brand account purchases. Millennial and Gen Z consumer demand continues to drive growth, accounting for more than 60% of all new consumer account acquisitions in the quarter. Millennial and Gen Z consumers also remained highest growing U.S. generation in terms of expenditure, increasing 28 percent year on year.
American Express Co’s first-quarter profit fell short of Wall Street expectations as the credit card company put aside more money to cushion possible losses from customers falling behind on debt repayments.
In premarket trading on Thursday, shares dipped about 1% as the mounting economic uncertainty in the United States gradually catches up with AmEx, which has been in a stronger position than its peers thanks to an affluent client base.
Customers have begun to feel the effects of consistently high inflation and quick rises in borrowing rates, prompting AmEx to increase its provisions to $1.1 billion in the third quarter, up from a gain of $33 million the previous year.
Chief Executive Stephen Squeri said in a statement that they are mindful of the mixed signals in the external environment.
According to Refinitiv statistics, AmEx earnings decreased 13% to $1.8 billion, or $2.40 per share, for the three months ended March 31, below analysts’ average forecast of $2.66 per share.
However, the business reiterated its earnings prediction for 2023. It anticipates earnings of $11 to $11.40 per share, compared to analysts’ expectations of $11.10.
