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Fueled by growth in goods and services and travel and entertainment spending, American Express Co. on Friday reported third-quarter revenue of $13.6 billion, a 24% increase from the same period last year. Net income for the quarter totaled $1.9 billion compared to $1.8 billion a year ago.
Overall cardholder spending increased 21%, driven largely by spending on travel and entertainment, AmEx’s core business. T&E spending rose 57% for the quarter from a year earlier, and, for the first time in more than two years, T&E spending in international markets surpassed pre-pandemic levels, the company says.
“The demand for travel has exceeded our expectations throughout the year,” AmEx chairman and chief executive Stephen J. Squeri said in a prepared statement.
The Global Merchant and Network Services unit accounted for $792 million in pretax income during the third quarter, up from $513 million a year ago, and total revenues net of interest expense for the operating segment totaled $1.7 billion, a gain of 26%. The increase in revenues for Global Merchant and Network Services primarily reflects an increase in network volumes, AmEx said.
Total network volume for the third quarter totaled $394.4 billion, a 23% gain from the same period a year earlier. Of that total, $55 billion was processed volume and $339 billion was billed business. For the first nine months of 2022, network volume was $1.13 trillion, up 24% from the same period a year earlier.
On the card-issuing side of its business, AmEx added 3.3 million proprietary cards in the quarter. Millennials and Gen Z customers are the company’s fastest-growing demographic, representing more than 60% of the company’s consumer proprietary card acquisitions in the quarter.
“We continue to attract new, premium customers through our differentiated value propositions, experiences, and services,” Squeri said. “Our credit metrics also remained strong even as we steadily rebuild loan balances, with delinquencies and writeoffs continuing to be low.”
Acknowledging that rising inflation and the growing threat of recession can negatively impact cardholder spending, Squeri said AmEx is mindful of the mixed signals in the broader economy and has plans to pivot should the economy change dramatically.
Net card fees totaled $1.5 billion during the third quarter, a 17% increase from a year earlier. Overall, card fees represented 11% of total third-quarter revenue.
“The strength of our results, combined with the many opportunities we see for our business, reinforce our confidence in our ability to achieve our long-term growth plan aspirations,” Squeri said.
