Amex Card Spend up 28% as Younger Consumers’ Urge to Splurge Trumps Inflation

For American Express there’s no recession in cards — literally — at least as evidenced by growing use of credit.

Spending volumes are up, in many cases eclipsing pre-pandemic levels; while younger consumers are clamoring to have the cards in their (tangible and digital) wallets.

In terms of headline numbers, the company said that billed business growth was 30% to $350 billion. Billed business is defined as activity on its cards, along with cash advances.

Processed volumes surged by 15%.

Supplemental materials released by the company showed that consumer spending on travel and entertainment was 120% above 2019’s levels. SME spending on those same items was 88% of 2019’s similar quarter levels.

And average proprietary basic card member spending, the company said in additional materials, was $5,452 in the quarter, up 28% over last years.

Not Just About Inflation 

As CEO Steve Squeri said, transactions are growing, and when it comes to spending on those cards, the swelling top line numbers and loan growth are not simply about inflation. Demand, he said, is solid.

Overall, spending on goods and services in the quarter were up 21% on an FX basis in the quarter.

As for the loans held on the books, total ending loans were $92.1 billion at the end of the most recent quarter; up 27% year over year. The cardmember receivables were also up 27%, to $53.2 billion.

Management noted that credit quality in the quarter remained strong. Net write off rates were 80 basis points, down from 1.4% a year ago.

Squeri said on the conference call with analysts that with revenues up 29% year over year (to $11.7 billion) and noted that demands for new cards, marked by premium fees, remains “particularly strong” among U.S. based millennial and Generation Z consumers, and small and medium-sized businesses (SMBs). Overall, 68% of the new cards acquired were fee-based cards.

Spending, by volumes for these younger cohorts were up 56% year over year.

“Card member engagement with our digital capabilities continues to grow with daily active users across the web and mobile, up double digits over last year,” said the executive.

CFO Jeff Campell said that momentum is continuing in online in card not present and online spending — but offline activity is strengthening too.

“Our large and global corporate clients have begun to show signs of business travel recovery, especially in the latter part of the quarter with a year-over-year growth rate for the quarter of 42%,” he told analysts.

Squeri also gave a nod to the growing role of partnerships with FinTechs. He pointed to the relationship with i2c, in Latin America.

“This will just make it easy to onboard FinTechs that want to have American Express because the reality is a lot of them — not a lot of most of them don’t do their own processing, they’ll partner with somebody else to do this.”