American Express said third-quarter results were buoyed by consumer and business spending that surged above pre-pandemic levels.
Spending by smaller firms was notably strong, management noted on the earnings call with analysts, outpacing activity seen with larger firms.
Overall spending on the firm’s cards — billed business — was up 31% to $280.4 billion in the quarter, beating the $273.6 lion average of analysts’ estimates reported by Bloomberg.
Total revenues, net of interest expense, gained 25% to $10.9 billion, which was better than the Street at $10.5 billion.
Drilling into the supplemental materials that accompanied earnings, the company said that within its spending, spending on goods and services, measured year over year, was up 18%. Spending on travel and entertainment, as economies re-opened and restrictions were lifted, was up 124%.
In terms of the demographics, the company said millennials and Generation Z, cohorts that accounted for 27% of total spending in the quarter, ramped up their activity by 48% vs. a year ago and 38% as compared to 2019 third quarter levels.
Management noted on the conference call with analysts that card spending is “skewing Millennial.”
In addition, small and medium-sized business (SMB) spending accelerated in the period. American Express said that total spending by these card-holding smaller businesses was up 28% year over year and was up 19% vs. 2019 levels. Larger firms lagged, according to the data and according to management commentary on the call, where these firms spent 25% more than they did last year in the third quarter. But spending by larger enterprises has yet to meet pre-pandemic levels, and was 43% below 2019 levels in the third quarter.
Rebound in Travel and Entertainment
With some granular detail on the rebound in the travel and entertainment billed business, and that 124% overall growth, spending at restaurants was up 4% over pre-pandemic levels, and up 68% year on year. Spending on airlines was still 57% below the pre-pandemic 3Q 2019 levels but was up 426% from last year.
Total ending loans in the most recent period gained nine percent from the second quarter, standing at $79.4 billion. U.S. consumers were 68 percent of the total loan book, while small businesses were 21%.
CFO Jeffrey Campbell said credit quality remained strong in the quarter. Card member loan net writeoffs stood at 60 basis points in the most recent period, compared to 2.5% last year.
As might be expected with the pandemic, global consumer spending on goods and services was marked by strong growth in online activity. The company said online spending was up 15% vs. last year and 37% above 2019. Offline spending grew 20% beyond last year, with a slight positive gain at 4% above 2019.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More