American Express shrugs off competition concerns after profit beat

American Express' AXP top brass brushed off concerns about intensifying competition for affluent customers after resilient spending by cardholders helped the company surpass second-quarter profit estimates on Friday.

A long history in the premium segment and targeted acquisitions in recent years have given the credit card giant the heft to provide more compelling offerings than its competitors, its executives said.

The reassurance comes days after Citigroup C unveiled plans to launch a new premium credit card, Citi Strata Elite, later this quarter to boost its appeal among wealthy customers.

"Bring it on," AmEx Chief Financial Officer Christophe Le Caillec said in an interview with Reuters. "We've been in that space for decades and we have built assets that our competitors do not have," he said.

Higher competition would encourage more customers to explore premium options. When they do, Le Caillec said he believes they will choose AmEx.

The company has long pursued a strategy centered on perks that give its cardholders a sense of exclusivity, rather than simple cashbacks. Analysts say the playbook has helped it build a loyal customer base, one that rivals may struggle to replicate quickly.

The acquisitions of Resy and Tock in recent years also set the company apart, Le Caillec said. The platforms offer AmEx cardholders privileged access to 27,000 restaurants worldwide.

AmEx will also roll out updates to its Platinum cards later this year for consumers and businesses in the United States, making its "largest investment ever in a card refresh".

STABLE SPENDING

Excluding one-time items, AmEx earned $4.08 per share for the three months ended June 30, compared with the $3.89 per share analysts were expecting, according to estimates compiled by LSEG.

The beat underscores how the credit card giant's focus on wealthy customers has helped insulate it from the effects of waning consumer confidence, which is more pronounced among lower-income households.

While not representative of the broader economy, AmEx's numbers offer valuable insight into evolving trends around travel and discretionary spending, especially among the most creditworthy borrowers.

Big banks said earlier this week that consumers remain in good financial shape despite high borrowing costs, trade policy uncertainty and a job market where companies are increasingly cautious about hiring.

AmEx's total revenue rose 9% to $17.9 billion, also above the $17.7 billion analysts were expecting.

Still, the New York-based company boosted its provisions for credit losses to $1.4 billion from $1.3 billion earlier. It also noted softer airline spending amid ongoing economic uncertainty, but said overall volumes would be stable.

"We live in uncertain times, but what we're seeing right now is very consistent spending," Chief Executive Officer Stephen Squeri said.

AmEx shares fell nearly 3%. As of last close, they had gained 6.3% so far this year, lower than the benchmark S&P 500 index's <.SPX> 7% gain.

"We encourage investors to add to the shares given the valuation discount to the market," William Blair analysts said in a note.

The company maintained its forecast for 2025, when it expects profit between $15 and $15.50 per share and 8% to 10% revenue growth.