Amex: Millennial and Gen Z Spending Surges 15%, Delinquencies Up Slightly

The enthusiasm to tap into credit lines and to spend on experiences continues unabated — and has been illuminated in stark relief by the latest earnings report from American Express.

Materials from the company Friday (Jan. 26) show that millennials and Gen Z consumers spent 15% more in the fourth quarter than they did a year ago, far outpacing the 6% growth logged by Gen X individuals and 2% by boomers. The younger cohorts account for 32% of spending across the company’s cards, the supplemental revealed.

Total spending on travel and entertainment related categories was up 9%, led by spending at restaurants, which surged 11%, followed by 6% growth at lodging and airlines.

Management said on the conference call with analysts that credit performance was strong, and that net charge-offs and delinquency rates, though up slightly, were still below pre-pandemic levels, and so credit trends are normalizing.

The card member loans that were 30 days past due were 1.4% of loans, up from 1.3% in the third quarter, and up from 1% last year. In the fourth quarter of 2019, the percentage stood at 1.4%.

CEO Steve Squeri said on the call that over the past two years, the company had added 25 new proprietary accounts — and that more than 70% of the new accounts have come to the company via fee-based products.

And millennial and Gen Z consumers, he said, represent more than 60% of the new accounts that were acquired globally as of last year.

Looking ahead, he said the company will look to deliver long-term annual revenue growth of 10%.

Investors bid the shares up 7% in early trading on Friday.

CFO Christophe Le Caillec said on the call that “the number of transactions from our card members continues to grow double digits year over year, a good indicator of the engagement of our customer base.”

Business services spending was up 5%, the CFO said, and credit performance continues to be strong from its small business segment. Loans and member receivables were up 13%.

During the question-and-answer session with analysts, management noted that most of the loan growth has come from members who have been cardholders for a number of years.

Resilient Spending From Younger Consumers

And with a nod to the resilient spending on the part of the younger generations, as Squeri said, “we get on this trajectory with these millennials and Gen Zs where … we start with that higher share of wallet because they’re used to using their American Express card everywhere. And as they move through their life cycles, their wallets increase. And, so, we have a lot of confidence in the long-term lifetime value of our millennial base and of the Gen Z base that we’re now acquiring.”