(Reuters) – American Express on Friday reported third-quarter profit that beat Wall Street expectations. This benefited from disciplined expense management that cushioned the blow from lower commissions earned from merchants.
The company's stock has risen about 53% since the beginning of the year, but was down 3.8% before the opening bell.
While U.S. consumer strength remains relatively strong, rising interest rates and economic uncertainty may deter some customers from spending on non-essential purchases.
AmEx's discount revenue (the fees it earns from merchants for facilitating transactions) rose 4% to $8.78 billion in the quarter, compared with expectations of $8.85 billion, according to data compiled by LSEG. below.
However, the company has historically been able to beat profit expectations despite lower spending, thanks to the excellent credit profile of its customers, which allows it to maintain low allowances for credit losses.
Total costs were $12.08 billion, lower than the expected $12.74 billion.
Sales rose 8% to $16.64 billion, but fell short of expectations of $16.67 billion.
Profits for the three months ended Sept. 30 rose 2% to $2.51 billion. Earnings per share were $3.49, compared with analysts' expectations of $3.28, according to estimates compiled by LSEG.
The company now expects earnings per share to be between $13.75 and $14.05 in 2024, higher than previously expected earnings of $13.30 to $13.80.
“The strong early results from our product innovation reinforce our confidence that we are investing in the right areas,” Chief Executive Officer Stephen Squery said in a statement. .
(Reporting by Niket Nishant and Pritam Biswas in Bengaluru; Editing by Maju Samuel)
