American Express is benefiting from pent-up spending as travel recovers from its pandemic slump, with card billings hitting a monthly record in March.
Travel and entertainment spending rose 121% during the quarter, while small-business spending was up 30% over a year ago with continued strong demand from millennials and Gen Z consumers, American Express said Friday. That helped overall revenue rise 29% to $11.7 billion during the first quarter. Net income was $2.1 billion, down 5% from a year earlier. Total card billings rose 35% year over year, hitting a record for monthly volume in March.
Travel spending still hasn't caught up to prepandemic levels for Amex. In the first quarter of 2019, travel accounted for 32% of card billings, and in the most recent quarter it was 23%. Last year travel spending
American Express added 3 million new customer accounts during the quarter, with Delta Air Lines’ cobranded Amex card sign-ups reaching an all-time high last month, CEO Stephen Squeri said during a conference call with analysts to discuss earnings.
“Our millennial and Gen Z customers continue to drive our highest consumer growth with their spending up 56% year over year and spending growth from all other age cohorts increasing as well in the quarter,” Squeri said, noting that e-commerce spending remains high even as in-store spending grows.
Amex also got its first strong boost from
Card volume attributed to Resy rose 16% in March as more consumers used it for booking and paying to dine at higher-end restaurants, the highest-volume month ever for the service, Squeri said.
Corporate travel spending rose 42% during the quarter, but it continues to lag behind consumer spending levels. “You’re seeing [companies] opening up their offices,” Squeri said, noting that conferences are also beginning to ramp up again.
Amex’s loan balances are back to prepandemic levels, though account repayment rates are high and delinquency rates are still low, the chief financial officer, Jeffrey Campbell, said.
“As loan balances especially in the interest-bearing portion build more meaningfully, we expect delinquency and loss rates to continue to slowly move up over time but remain below prepandemic levels this year,” Campbell said.
Amex didn't report any direct effects from global supply-chain problems, but said inflation contributed to a 26% increase in operating expenses during the quarter. Marketing expenses also took $1.2 billion out of the bottom line.
John Hecht, an equity analyst with Jefferies, told investors in a Friday note to investors that Amex’s first quarter was mostly positive, with improving spend trends coupled with strong credit. “Amex has effectively taken increased wallet share of goods and services and younger demographic spend, which has helped billed business accelerate.”
