American Express: Gen Z and Millennials Represent 36% of Card Spend

American Express posted third-quarter earnings results Friday (Oct. 17) that indicated strong growth in card spending, particularly among consumers in the Generation Z and millennial cohorts.

During a conference call with analysts, American Express CEO Steve Squeri said overall card spending grew by 9%, and retail categories and travel spending were particularly strong.

“The big news in the quarter was the launch of our refreshed U.S. consumer Platinum Card and Business Platinum Card, which reinforces our leadership in the premium space,” Squeri said. “I’m very pleased to say that the initial customer demand and engagement are exceeding our expectations.”

“Our consumer and business Platinum Card franchise alone accounts for approximately $530 billion of annual spend globally,” he added later during the call.

The percentage of card member loans past due stood at 1.3%, a rate that has been flat through the last several quarters, according to an earnings presentation.

Strong Card Spend by Young Members

Chief Financial Officer Christophe Le Caillec said on the call that U.S. consumer and small business delinquency rates were below 2019 levels. Retail spending was up 12%, and within that segment, spending on restaurants gained 9%.

“Premium T&E bookings saw good momentum, with spending on front-of-cabin airline tickets up 14%,” Le Caillec said. “The momentum we’ve seen from younger customers also continued. Millennials and Gen Z now account for 36% of total spend, making up the same share as Gen X. International had another strong quarter.”

Spending across those cohorts surged by 13%, and the average number of transactions per U.S. customer was about 25% higher than in older cohorts. In tandem with that spending, loans and card receivables gained 7%.

“[T]he credit profiles of consumer applicants following the refresh are even better than what we were seeing before, with the average FICO score up 15 points,” Le Caillec said during the call.

The company expects full-year revenue growth of 9% to 10%, Squeri said during the call.

American Express shares were up 5% in intraday trading Friday.

Asked on the call about the spending momentum, Squeri said: “If you look back over the last six or seven quarters, it’s been relatively stable. Is this a sign of things to come? I don’t know if we’re going to keep this billings up the way we are, but I don’t see anything [on] the horizon here that would indicate that billings are going to slow down or decline.”

“I think we’re still in a relatively stable environment,” he added. “I would also point out, as I always point out, our card base is not representative of what’s going on across the United States. It truly is a bifurcated economy. We have a small percentage of the cards, but our cardholders are much more premium, and we’re lucky to have a much more premium card base. We’re seeing a little bit of a pickup in spend. We hope that that continues into the fourth quarter.”

Small business spending growth of 4% was also encouraging, he said during the call.

Looking ahead, Squeri said, retail spending has been strong, “especially in the U.S. consumer business, [which] hopefully is a good harbinger for what will come during the holiday season…”