American Express The earnings, released on Friday (July 19), showed that consumers continue to spend money on experiences, especially dining out, driven by younger generations who are using their cards more frequently.
Spending by millennial and Gen Z customers increased 13% year over year, according to executives.
CFO Christophe Le Caillec Spending growth was seen in several areas, with spending on goods and services up 6 percent and travel and entertainment up 7 percent, he said on a conference call with analysts.
“Growth has slowed in some areas, [travel and entertainment] “Spending declined compared to the previous quarter, particularly in the air and lodging categories,” he said, but spending at restaurants “remained strong,” he said.
As for increased card usage, the company’s transaction volume increased 9% in the June quarter compared to the same period last year.
“Strong engagement” from young consumers
“We see that younger cardholders continue to show strong engagement, transacting on average 25% more than older customers,” Le Cayec said, adding that when it comes to categories like food and beverage, they transact twice as much.
Millennial and Gen Z consumers accounted for one-third of the $165 billion in U.S. consumer service billings, a measure that includes cardholder spending and cash advances.
Increased spending by small and medium-sized businesses; Further details are provided in the earnings supplement.The international region saw double-digit growth in terms of consumer spending, Le Cayec said.
“Lending growth in particular will continue to moderate by a few percentage points going into 2024, but we still expect double-digit growth by the end of the year,” the CFO said.
According to supplementary materials, reserves accounted for 2.8% of card loans, down slightly from the previous quarter.
The 30-day delinquency rate was 1.2% of total loans, down from 1.3% in the first quarter and down from 1.5% pre-pandemic. The net charge-off rate was steady at 2.1%.
CEO Steve Squeri He said spending was “heavily driven” by younger consumers and that “even in a slower economic growth environment, our credit statistics remain strong because when consumers decide to cut back on spending, they cut back a little on discretionary spending but continue to pay their bills.”
Asked on the conference call about the trajectory of credit metrics, Le Cayec said they “will likely stabilize at roughly the same level as in the second quarter, i.e. around 2.1 percent” as the outlook for consumer trends and delinquency rates improves.
Management expects revenue growth of 9% to 11% in 2024, unchanged from its previous outlook. Shares were down 4% at the open on Friday.
