American Express beats earnings expectations as card spending accelerates

The latest quarter’s results reflect the impact of $866 million in credit release reserves, or $658 million after taxes, that American Express
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It said in a statement that it was mainly driven by “strong credit activity and continued improvements in the macroeconomic outlook.”

American Express net revenue minus interest expenses was $10.24 billion in the second quarter, up from $7.68 billion a year earlier and by FactSet consensus, which raised $9.57 billion dollars. The company attributes those results in large part to growth in cardholder spending and an increase in the average discount rate due to more spending on travel and entertainment compared to a year ago.

“Our strong second quarter results show the steps we have taken to manage the company through the pandemic and the investment strategy to rebuild its growth momentum,” said CEO Stephen Squeri. Ours is paying off.

American Express saw a “record level” of US Platinum Card member acquisitions during the quarter, issuance continues, amid “strong” demand for premium charge cards their.

Amex acquired 2.4 million new exclusive cards during the quarter and saw member retention rates “well above pre-pandemic levels”. Spending accelerated QoQ and exceeded pre-pandemic levels in June, according to the release.

The company noted that consolidated provisions for credit losses resulted in a profit of $606 million for the quarter, largely reflecting reserve release and lower net write-offs. That compares to a provisioning expense of $1.6 billion from a year ago due to “significant credit reserves” at the time.

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