Younger, affluent consumers are showing notable resilience when it comes to spending on experiences and travel — and using their credit cards to do so.
To that end, Amex said Friday (April 19) that the majority of its account openings have been from Gen Z and millennial consumers.
U.S. consumer billed business, which represents cardmember spending tied to transactions and card advances, was up 8% year on year, to $153 billion in the first quarter. Spending on goods and services grew by 8% and on travel and entertainment by 8% as well. Millennial and Gen Z spending was up 15% — far outpacing other cohorts where spending growth was up in the high single digits.
Commercial billed business gained 2% to $127 billion, as measured year on year.
Total card loans grew by 12%.
In reference to credit quality, the percentage of loans past due stood at 1.3%, flat from the fourth quarter and up a bit from the 1.2% last year and below pre-pandemic levels of 1.5%.
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During the conference call with analysts, CEO Steve Squeri said that “spending by U. S. SMB card members continued to be soft, but new customer acquisitions, retention and credit on our small business products all continue to be strong.”
Younger Consumers, Spending More
Overall, during the quarter, the company added 3.4 million cards, and he said that “we continue to see strong demand from millennial and Gen Z consumers who accounted for over 60% of the new consumer account acquisitions globally.”
CFO Christophe Le Caillec said on the call that “we see that younger customers use their cars more overall, and this is even more pronounced in certain spend categories. For example, customers aged 35 and under used their cards at restaurants over 70% more on average than other customers in this segment.”
Looking ahead, said the CFO, delinquencies and write-off rates should increase at a “modest” pace through the rest of the year.
And with some commentary about the impact of the looming Consumer Financial Protection Bureau (CFPB) rule that would cap credit card late fees, management said on the call that the late fees from the U.S. consumer segment make up less than 1% of overall revenues.
In looking at the year’s projections, the company has guided to revenue growth of 9% to 11% in 2024.
Investors sent the shares 4% higher at the start of trading on Friday morning.
