(Bloomberg) -- American Express Co. saw spending growth on its network unexpectedly accelerated in the first quarter, even as the firm set aside more money to cover souring loans, weighing on profit.
Spending volume jumped 14% to $398.9 billion in the first three months of the year, fueled by the popularity of its Platinum Card and other premium products, New York-based Amex said Thursday in a statement. That topped the 13% average estimate of analysts surveyed by Bloomberg.
Provisions for loan losses totaled $1.1 billion the period, more than the $890 million average estimate of analysts surveyed by Bloomberg. That was a reversal from a year ago, when the bottom line was helped by a reserve release.
“Our customers have been resilient thus far in the face of slower macroeconomic growth, elevated inflation and higher interest rates, with credit performance remaining best-in-class,” Chief Executive Officer Steve Squeri said in the statement. “That said, we’re mindful of the mixed signals in the external environment.”
Shares of Amex slid 0.9% to $163.50 in early trading at 7:05 a.m. in New York. The stock had gained 12% this year through Wednesday.
JPMorgan, Citi
Rivals JPMorgan Chase & Co. and Citigroup Inc. are also grappling with a surge in write-offs. That follows years of record-low losses on card loans, when consumers were aided by trillions of dollars in stimulus that the US government pumped into the economy.
First-quarter profit at Amex dropped 13% to $1.82 billion, or $2.40 a share, missing Wall Street’s $2.68 estimate. Operating expenses were higher than expected and included a $95 million loss on Amex Ventures investments.
Amex spent years revamping the benefits on its popular $695-a-year Platinum Card, fueling a jump in net card fees and purchases. The payments giant has also continued to benefit from a resurgence in consumer spending on travel and dining in the wake of the pandemic.
Discount revenue — a measure of the fees Amex collects from merchants each time a consumer uses a card — totaled $7.95 billion and net card fees were $1.7 billion. That boosted total revenue by 22% to $14.3 billion, topping analysts’ estimates.
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