American Express Ups Profit Forecast as Wealthy Clients Keep Spending

Credit card giant American Express has raised its full-year profit forecast, driven by its wealthy customer base's spending on travel, dining, and entertainment. The company reported a 39% increase in second-quarter profit and noted that its premium customers insulated it from broader economic weaknesses.

Credit card giant American Express raised its full-year profit forecast on Friday, attributing the increase to its wealthy customers' continued spending on travel, dining, and entertainment. The company also posted a better-than-expected second-quarter profit, highlighting the advantages of targeting a premium customer base.

AmEx's affluent cardholders have somewhat shielded the company from weaknesses in the broader economy, even as rival lenders warn of reduced demand due to higher borrowing costs. CEO Stephen Squeri stated, 'Increased scale, combined with our premium, high credit-quality customers, our well-controlled expense base, and our successful investments... fuels the earnings power of our core business.'

The company now predicts its 2024 earnings per share will be between $13.30 and $13.80, up from an earlier forecast of $12.65 to $13.15. In the second quarter ended June 30, profit rose 39% to $3.02 billion, or $4.15 per share. Excluding a one-time gain from selling its fraud prevention technology unit, Accertify, the company earned $3.49 per share, exceeding analysts' estimates of $3.24 per share, according to LSEG data.

Revenue increased by 9% to a record $16.33 billion, though it slightly missed LSEG's estimate of $16.59 billion. Shares of the New York-based company fell 2% in premarket trading. Last month, the company agreed to acquire the restaurant-booking platform Tock from Squarespace to strengthen its position in the dining industry. Analysts believe this move could bolster AmEx's efforts in the small-and-medium-enterprise market, which remains an attractive segment despite a recent slowdown in SME spending growth.

(With inputs from agencies.)