(Reuters) – American Express said on Friday its third-quarter profit had modestly improved, as spending on goods, services and travel kept up despite fears of a potential economic slowdown later in the year.
AmEx’s revenue rose 24% to $13.6 billion, helped by a 21% jump in card member spending on the back of a rebound in cross-border travel as people shrugged off rising airfare to throng airports after a long hiatus due to the pandemic.
The financial health of U.S. consumers seems resilient, big U.S. banks have said, even as the economy is battered by decades-high inflation and aggressive rate hikes by the Federal Reserve that have escalated worries of a recession.
Still, the card lender built provisions to $778 million in the reported quarter to prepare for potential defaults, a sharp contrast from a year earlier when the economy’s rapid recovery from the pandemic allowed it to release reserves of $191 million.
AmEx’s expenses rose 19% as it spent heavily on customer engagement and compensation. Last month, the company said it was looking to hire around 1,500 people for technology roles, even as other U.S. financial companies have slashed headcount in recent months.
Net income rose 3% to $1.88 billion or $2.47 a share in the three months ended Sept. 30, compared to $1.83 billion, or $2.27 a share, a year earlier.
Analysts had estimated the company to report a profit of $2.41 a share, according to data from Refinitiv IBES. It was not immediately clear if the reported numbers were comparable to estimates.
(Reporting by Mehnaz Yasmin and Niket Nishant in Bengaluru)
