The latest results from American Express show consumers are continuing to spend on leisure activities — and are using their cards to so.
The company also noted that credit performance across its portfolio remains “strong.”
Earnings materials show that total network billed business was up 7% in the quarter to $420 billion. Billed business is a measure of cardholder spending, and includes cash advances. Spending on goods and services was up 6% year on year to $54 billion; spending on travel and entertainment was up 13% to $366 billion. Those metrics are worldwide, and the U.S. showed similar growth rates in those categories.
Drilling down into the U.S., among younger consumers, in the millennial and Generation Z cohorts, spending continues to be up by double digits, and management noted that these consumers increased by 18% and represented roughly a third of total consumer-related spending.
Turning to Amex’s commercial business, spending on the part of smaller firms was up 2%, and was flat among larger enterprises.
CEO Steve Squeri said during the Friday (Oct. 20) conference call with analysts that “we’re still very positive on small business … it’s still a huge opportunity for us,” adding that “our small business footprint stretches across a variety of small businesses, whether it’s restaurant and, and retail or, or, or professional services and construction and so forth.”
Card loans 30 days past due stood at 1.2%, a ratio that has been steady through the year and still is below the 1.5% seen just before the pandemic.
Squeri said that millennials and Gen Z consumers accounted for more than 60% of all new consumer account acquisitions globally in the quarter.
“Demand for our products remain robust, particularly for fee-based products, which represented more than 70% of the new accounts acquired in the quarter,” he said. Spending at restaurants remained particularly strong, he said, and reservations on the firm’s Resy platform set a quarterly record.
CFO Christophe Le Caillec said elsewhere on the call that more than 70% of its revolving loan growth in the U.S. continues to come “from our tenured customers.”
And though delinquency rates and charge-offs may increase through the next few quarters, he said, they are likely to remain below pre-pandemic levels.
As Squeri told analysts, “the current revenue growth that we have, the current billings growth that we have is in line with what our long-term growth aspirations are.” The company is targeting double-digit revenue growth next year, and American Express intends to spend roughly $5.5 billion on card acquisition efforts next year.
Asked about the open banking proposal announced by the CFPB earlier this week — and in one analyst’s questioning, whether open banking “forces banks to hand over the keys to their customer relationships” — Squeri noted that “the U.K.’s had open banking for 10 years, and it’s had no impact on our business either positively or negatively.”
Shares were down 4% in early intraday trading on Friday.
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