American Express Q3 Profit Surpasses Estimates

By Niket Nishant and Pritam Biswas

(Reuters) – American Express reported a third-quarter profit above Wall Street estimates on Friday, benefiting from disciplined expense management that cushioned the blow from softer spending.

Affluent customers allowed the company to maintain relatively smaller provisions for credit losses compared to peers that serve a broader spectrum of customers, including those with lower income.

The credit card giant also kept a lid on incentives, rewards, and other expenses, allowing it to surpass profit expectations even as revenue growth decelerated.

> "(This quarter is) another proof point of management's ability to flex expenses to hit earnings per share (EPS) targets when top line is softer," said Citi analyst Keith Horowitz.

However, AmEx shares fell nearly 5% despite raising its profit forecast for 2024.

> "Over time, cost-cutting can only take you so far," remarked Brian Mulberry, client portfolio manager at Zacks Investment Management, an investor in AmEx.

Total expenses were $12.08 billion in the quarter, lower than expectations of $12.74 billion, according to estimates compiled by LSEG.

Revenue rose 8% to $16.64 billion but fell short of the projected $16.67 billion estimate. Profit reached $2.51 billion, marking a 2% increase from last year.

On a per-share basis, AmEx earned $3.49, exceeding analysts' forecast of $3.28.

> "We do not need double-digit revenue growth to hit mid-teens EPS because we are disciplined with our operating expenses. Our credit is also very, very strong," Chief Financial Officer Christophe Le Caillec told Reuters in an interview.

The company now anticipates 2024 EPS between $13.75 and $14.05, higher than the previous range of $13.30 to $13.80.

> "Expectations were elevated, but we believe the growth opportunities remain large and the valuation remains attractive," William Blair analysts noted in a report.