NEW YORK (AP) — American Express’s third-quarter profit beat analysts’ expectations as the credit card company’s cardholders continue to spend, many carrying a balance.
American Express earned $2.51 billion, or $3.49 per share, for the period ended September 30. That compares with $2.45 billion, or $3.30 per share, a year earlier.
The performance exceeded the $3.27 per share that analysts surveyed by Zacks Investment Research had hoped for.
Sales totaled $16.64 billion, matching Wall Street estimates.
The company again benefited from the fact that its card members – who are generally wealthier and less exposed to economic fluctuations – continued to issue their cards despite some economic uncertainty and the effects of inflation.
Customers spent $387.3 billion on their cards last quarter, a 6% increase from the year before. Merchants pay a fee every time they accept an American Express card. This fee varies depending on the industry and size of the merchant, but is typically 2% to 4%.
In addition, American Express customers maintain a balance on their card. The company reported $134.5 billion in cardmember loans, up from 14% a year earlier.
That helped American Express generate interest income of $6.15 billion in the quarter, up 17% from the year before.
“The new benefits and capabilities we’ve added in popular categories like dining are fueling our growth with Millennials and Gen Z consumers, who represent 80% of new accounts acquired with the US Consumer Gold Card, and overall our fastest growing consumer cohort remain in the US,” Chairman and CEO Steve Squeri said in a statement.
American Express also raised its full-year profit forecast on Friday. The company now expects earnings between $13.75 and $14.05 per share. The previous forecast was for earnings between $13.30 and $13.80 per share. Analysts polled by FactSet forecast full-year earnings of $13.24 per share.
Shares fell 2.5% before the market opened Friday.
