By Niket Nishant and Jaiveer Shekhawat
(Reuters) -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.
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.
Net write-off and delinquency rates, however, were below pre-pandemic levels, the company said.
“It’s a bit of a business-as-usual quarter for us,” CFO Christophe Le Caillec said. “We see a lot of demand for our products and services coming from Gen Zs and Millennials. They are also signing up for premium products.”
The resumption of student loan repayments in October has not changed spending patterns so far, the CFO said.
AmEx reported a profit of $3.30 per share, up from $2.47 per share a year earlier. On average, analysts had expected a profit of $2.94 per share, according to LSEG IBES data.
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.
"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.
Revenue, net of interest expense, surged 13%, to $15.38 billion. Consolidated expenses climbed 7%, to $11 billion, driven by higher customer-engagement costs.
(Reporting by Niket Nishant and Jiaveer Shekhawat in Bengaluru; Editing by Pooja Desai)
