AmEx Revenue Surges as Fight for Card Customers Pays Off

(Bloomberg) -- The battle to win affluent customers is paying off for American Express Co.

The credit-card giant added a record number of new customers to its tony Platinum card in the period. That helped revenue surge 33% to $10.2 billion in the second quarter, topping the $9.6 billion average estimate of analysts in a Bloomberg survey. Shares soared to a record.

“Demand for our premium, fee-based products continued to be robust,” AmEx Chief Executive Officer Steve Squeri said in a statement announcing the results, noting the firm also retained card customers at rates above pre-pandemic levels.

AmEx was hit hard by the Covid-19 pandemic, which severely curtailed travel and, as a result, spending on the firm’s cards. The lender responded by beefing up rewards on many of its products, including its Platinum card, as it sought to curtail attrition.

The moves seem to have worked: Card fees jumped 13% to $1.29 billion in the quarter. The boost in revenue, along with an $866 million release of reserves, helped net income soar to $2.28 billion, trouncing analysts’ average estimate of $1.38 billion.

AmEx shares gained 4.8% to $179.06 at 9:43 a.m. in New York, the best performance among the 65 companies in the S&P 500 Financials Index. They have climbed 48% this year, more than the 24% increase for the index.

Earlier this month. AmEx said it’s retooling the Platinum card again, upping the annual fee to $695 from $550 and adding perks tied to private jets and hotel stays.

“Part of our business model is you can’t rest on your laurels even though the Platinum is going very very strong,” Chief Financial Officer Jeff Campbell said in an interview Friday. “It’s early days -- we just launched at the beginning of this month -- but so far the demand is very, very strong for the product.”

Luring new card customers came at a cost in the second quarter, with expenses surging 44% to $7.91 billion, higher than analysts’ $7.62 billion average estimate.

AmEx has said it expects to earn $8.85 to $9.25 a share in 2022 -- guidance it originally set for its performance in 2020 before its business was hamstrung by the pandemic. On Friday, the firm, buoyed by second-quarter results, said it now expects earnings next year to be at the high end of that range.

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