Earnings

Amex Card Spend, Loan Volume Drive Q1 Results

The customers are still opening their wallets, and using the cards.

Results posted by American Express on Wednesday (April 18) showed numbers that topped the Street. The key driver, of course, was customer spending amid a buoyant U.S. economy.

The growth in card metrics disclosed by the company echo other earnings reported by banks, including Citigroup and JPMorgan Chase, which also showed traction in card spending.

Overall customer spend was up 3 percent year over year in the United States, and gained 7 percent globally. The company added 3.5 million cards in the latest quarter.

That growth helped to propel revenues, measured net of interest expense, to $9.7 billion, better than the Street at $9.4 billion. Net income of $1.86 topped estimates of $1.71.

Loans made in the quarter to the card’s customer base were up 16 percent, reaching $75.8 billion. Yield on those loans came in at 10.8 percent, the company said in supplemental materials, up from 10.3 percent in the prior year’s period.

Discount revenues, tied to fees that are charged by the card giant to merchants (aka swipe fees), were up 9 percent to $5.9 billion. The swipe fee percentage rate was 2.37 percent, down about six basis points from last year.

As noted by Bloomberg, the loan growth has some costs attached, as provisions for credit losses were up 35 percent to $775 million, though that tally was less than the Street’s expected $809 million. Net charge-off rates were 1.6 percent, compared to 1.7 percent last year.

Showing some expense growth in a competitive environment, expenses were up 9 percent to $6.9 billion, reflecting higher rewards, which were $2.35 billion, up 14 percent year on year, with points redeemed for travel and lodging up 3.8 percent from the fourth quarter.

During the conference call with analysts, CFO Jeffrey Campbell noted that increased consumer confidence had marked the quarter – along, of course, with increased spending.

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