American Express Shatters Expectations Amidst Affluent Cardholder Spend

American Express surpassed Wall Street's expectations for its second-quarter earnings on Friday, largely due to strong spending from its affluent cardholders. This highlights how the credit card company's focus on high-net-worth individuals helps shield it from the impact of declining consumer confidence seen in lower-income households.

Although not indicative of the overall economy, AmEx's results provide insights into changing trends in travel and discretionary spending among the most creditworthy users. Major banks recently corroborated that consumers are still financially stable despite high borrowing costs, trade policy unpredictability, and a more cautious job market.

American Express reported earnings, excluding one-time charges, of $4.08 per share for the quarter ending June 30, beating the $3.89 per share estimate by analysts. Furthermore, the company's total revenue increased by 9% to $17.9 billion, topping expectations. However, the company increased its provisions for credit losses to $1.4 billion.

Competition is intensifying among premium credit card providers. Citigroup announced that it would introduce a new luxury credit card, Citi Strata Elite, this quarter, aiming to attract affluent customers. AmEx CFO Christophe Le Caillec welcomed the competition, asserting that customers will choose American Express when exploring premium options like their enhanced Platinum cards.

AmEx's distinguishing factor is its ownership of platforms such as Resy and Tock, enabling cardholders exclusive access to 27,000 restaurants, according to Le Caillec.

(With inputs from agencies.)