In this article, American Express’ affluent cardholders showed a willingness to spend more freely towards the end of last year, as stated by Chief Financial Officer Christophe Le Caillec in an interview with CNBC. Spending on AmEx cards surged by 8% year over year in the fourth quarter, rebounding from a slower growth rate of 7% earlier in the year to 6% during the second and third quarters, as indicated in the company’s earnings presentation.
The increase in spending at year-end was observed across all customer segments and regions, with a notable boost from millennials and Gen Z users, whose transaction volumes rose by 16%, up from 12% in the third quarter. Conversely, older age groups exhibited more restraint in their card usage, with Gen X customers increasing spending by 7% in the fourth quarter, while baby boomers saw a modest 4% rise in billings.
Le Caillec expressed optimism for the future, citing the strong growth from Gen Z and millennials, with a 2 percentage point acceleration that bodes well for the company’s outlook up to 2025. The heightened transaction levels have persisted into the first three weeks of the current year, he added.
Younger Americans are known to prioritize experiences over material goods, a trend reflected in AmEx’s results. Alongside rival card issuer JPMorgan Chase, AmEx dominates the market for high-end credit cards. Travel and entertainment expenditures surged by 11% in the quarter, outpacing the 8% growth in goods and services spending. The increase in travel spending was primarily driven by a 13% rise in airline expenditures, with business class and first-class airfare spending up by 19%, according to Le Caillec.
Following the company’s earnings report that met analysts’ expectations, AmEx shares experienced a more than 2% decline in midday trading on Friday. Despite this, the New York-based company’s shares have shown strong performance over the past year, reaching a 52-week high on Thursday. Analysts at William Blair, led by Cristopher Kennedy, expressed optimism about Amex’s accelerating billings growth, viewing it as a crucial factor for the company to achieve its revenue growth target of at least 10%. They recommended buying on any market pullback.
