By Mehnaz Yasmin and Niket Nishant
(Reuters) -American Express’s first-quarter profit vaulted past Wall Street estimates on Friday, driven by an affluent customer base that increased spending as recession fears receded.
Amid a turbulent landscape in which concerns over the financial well-being of lower-income consumers have troubled several lenders, American Express (NYSE:)’s clientele has shielded the company from significant impact and left it largely unscathed by the challenges others in the industry faced.
Shares of the New York-based company rose about 2%, to $221.66 in premarket trading, after it reported a profit of $3.33 a share for the three months ended March, sailing past analysts’ average expectation of $2.96 a share, according to LSEG data.
“We continue to attract high-spending, high credit-quality customers to the franchise,” chief executive officer Stephen Squeri said in a statement.
Billed business, which represents the transaction values on AmEx cards and other payment products, rose 6%, to $367 billion in the first quarter.
While most U.S. lenders have expressed optimism about the resilience of American consumers so far, 11 rate hikes by the Federal Reserve over the last two years have made them susceptible to default risks and they have responded by raising provisions.
AmEx built $1.3 billion in provisions for the first quarter, compared with $1.1 billion a year earlier.
Still, the credit card giant has been immune to changes in spending and has downplayed worries of an economic slump for the last two years, bucking a larger trend of consumer softness expectations.
For the full year, the company maintained prior revenue growth expectations of 9% to 11% and a profit forecast of $12.65 to $13.15 a share, it said in a statement.
