Earnings

Amex Q1 Cardholder Spending, Loans Up

American Express

American Express, in reporting its latest quarterly results, showed evidence Thursday (April 18) morning that consumer spending remains resilient, even having navigated the bumps of the prolonged government shutdown that came early in the quarter.

In terms of headline numbers, revenues, net of interest expense, were up 6.6 percent, logging $10.36 billion. That was a slight miss from the $10.44 billion the Street had expected. Card spending was up 4 percent as billed business, at $295.7 billion, and got a boost from the United States, up 7 percent to $195.5 billion. Outside the U.S., billed business was down 1 percent to $100.2 billion.

Supplemental earnings materials from the company reveal that total cards in force were 113.9 million, slightly down from last year’s 114.2 million. Card growth was notable in the U.S., at 5 percent to 54.1 million.

American Express also revealed that average spending tied to its proprietary cards was up 1 percent to a bit more than $4,740.

Discount revenue, which related the fees charged to merchants for accepting Amex cards, gave $6.2 billion for the quarter, up 5.2 percent increase from a year ago.

Lending grew by 11 percent, in total, to $81 billion. International lending activity was up 15 percent to $10.2 billion, while in the United States, that tally was up 11 percent to $70.8 billion. The ending balance of $2.1 trillion tied to the loan book was up 19 percent year on year.

These gains outpaced the rewards that represent a significant expense for Amex, and which help spur consumer spending on the company’s cards. That expense line was up 4 percent to $2.5 billion. Interest income on loans was $2.7 billion in the quarter, adding 17 percent year on year. Provisions for losses were up 4 percent, to $809 million.

In terms of costs, the company pointed to its card partnership with Delta Air Lines, which will boost expenses by $200 million in 2019. CEO Steve Squeri has told analysts that upon renewal of the pact, which would be at the beginning of 2030, the two companies will be “in each other’s DNA” in a way that means a renewal will be a mere “formality.”

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