(Updated)

AmEx beats profit estimates on boost from reserve release

AmEx beats profit estimates on boost from reserve release
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BENGALURU (July 23): American Express Co (AmEx) beat estimates for second-quarter profit on Friday as increased consumer spending and an improving economy prompted it to release more funds from its loan-loss reserves.

Shares of the company rose 3% in pre-market trading and were on track to open at a record high.

The reopening of the global economy is expected to unleash widespread demand for travel and shopping from consumers stuck indoors for more than 18 months, helping boost credit-card transactions.

"We saw card member spending accelerate from the prior quarter and exceed pre-pandemic levels in June, with the largest portion of this spending growth coming from millennial, Gen Z, and small business customers," chief executive officer Stephen Squeri said in a statement.

Squeri also said the addition of US Platinum card members touched record levels in the quarter on strong demand for premium, fee-based products.

The company sold 2.4 million new proprietary cards in the quarter, while spending on goods and services on its cards grew 16% on a currency adjusted basis.

Net income rose to US$2.28 billion, or US$2.80 per share, for the quarter ended June 30 from US$257 million, or 29 cents per share, a year earlier. Analysts had expected US$1.67 per share, according to Refinitiv IBES data.

The credit-card issuer posted a benefit of US$606 million due to the release of US$866 million from its loan-loss reserves.

Excluding interest expense, AmEx's total revenue rose 33% to around US$10.24 billion.