(Reuters) – American Express Co on Friday reported higher profit that exceeded Wall Street estimates for the fourth consecutive quarter, supporting a recovery in consumer spending emboldened by an easing of COVID-19 restrictions.
Shares of the company rose 2% to $ 180.78 in pre-market trading and were expected to open at an all time high.
After months of stagnant spending, credit card issuers like AmEx are starting to see a turnaround with a resumption of social activities made possible by an increase in the number of people fully vaccinated.
Net income was $ 1.83 billion, or $ 2.27 per share, for the quarter ended Sept. 30, up 70% from a year ago. Analysts had expected a figure of $ 1.80 per share, according to IBES data from Refinitiv.
AmEx said the growth was driven by increased spending on goods and services (G&S) by consumers and small businesses, as well as its Millennials and Gen Z customers.
Travel and entertainment (T&E) spending in the quarter more than doubled from a year ago, with food and beverage outlays surpassing pre-pandemic levels, restrictions eased and more people s venturing out of their homes, the company said.
The New York-based company released $ 393 million in reserves during the quarter, reflecting an improvement in overall credit prospects.
Net interest income, a measure that measures how much credit card companies make on interest payments, rose 6% to $ 1.99 billion.
Excluding interest expense, the company’s total revenue increased 25% to approximately $ 10.93 billion.
Last week, JPMorgan Chase & Co and Citigroup Inc also reported increased spending on their credit cards in the United States. However, due to unprecedented government stimulus measures, an increase in spending did not translate into windfall profits from their card business as consumers with cash paid their bills every month, thus avoiding bankruptcy. interest payments or late fees.
(Reporting by Niket Nishant in Bangalore; Editing by Shailesh Kuber)