American Express Earnings Show Travel and Entertainment Spending Climbs 13%

The latest results from American Express show consumers are continuing to spend on leisure activities — and are using their cards to so.

The company also noted that credit performance across its portfolio remains “strong.”

Earnings materials show that total network billed business was up 7% in the quarter to $420 billion. Billed business is a measure of cardholder spending, and includes cash advances. Spending on goods and services was up 6% year on year to $54 billion; spending on travel and entertainment was up 13% to $366 billion. Those metrics are worldwide, and the U.S. showed similar growth rates in those categories.

Drilling down into the U.S., among younger consumers, in the millennial and Generation Z cohorts, spending continues to be up by double digits, and management noted that these consumers increased by 18% and represented roughly a third of total consumer-related spending.

Turning to Amex’s commercial business, spending on the part of smaller firms was up 2%, and was flat among larger enterprises.

CEO Steve Squeri said during the Friday (Oct. 20) conference call with analysts that “we’re still very positive on small business … it’s still a huge opportunity for us,” adding that “our small business footprint stretches across a variety of small businesses, whether it’s restaurant and, and retail or, or, or professional services and construction and so forth.”

Delinquency Ratios Hold Steady

Card loans 30 days past due stood at 1.2%, a ratio that has been steady through the year and still is below the 1.5% seen just before the pandemic.

Squeri said that millennials and Gen Z consumers accounted for more than 60% of all new consumer account acquisitions globally in the quarter.

“Demand for our products remain robust, particularly for fee-based products, which represented more than 70% of the new accounts acquired in the quarter,” he said. Spending at restaurants remained particularly strong, he said, and reservations on the firm’s Resy platform set a quarterly record.

CFO Christophe Le Caillec said elsewhere on the call that more than 70% of its revolving loan growth in the U.S. continues to come “from our tenured customers.”

And though delinquency rates and charge-offs may increase through the next few quarters, he said, they are likely to remain below pre-pandemic levels.

As Squeri told analysts, “the current revenue growth that we have, the current billings growth that we have is in line with what our long-term growth aspirations are.” The company is targeting double-digit revenue growth next year, and American Express intends to spend roughly $5.5 billion on card acquisition efforts next year.

Asked about the open banking proposal announced by the CFPB earlier this week — and in one analyst’s questioning, whether open banking “forces banks to hand over the keys to their customer relationships” — Squeri noted that “the U.K.’s had open banking for 10 years, and it’s had no impact on our business either positively or negatively.”

Shares were down 4% in early intraday trading on Friday.