Bengaluru, India – American Express reported a significant surge in first-quarter profit that exceeded expectations, largely driven by its affluent customer base. Despite economic uncertainties affecting its industry peers, the credit card company’s emphasis on high-income consumers has proven to be a successful strategy in weathering the challenging financial landscape. Analysts predict that American Express will unveil initiatives to further attract small businesses during its upcoming investor day.
William Blair analyst Cristopher Kennedy highlighted AmEx’s focus on premium consumers and small to medium enterprises (SMEs) as a key factor in its sustained success. The company’s ability to enhance its value proposition and expand its network has bolstered its positioning in the market, setting the stage for continued growth. CEO Stephen Squeri emphasized the potential for increased spending among SMEs moving forward, pointing to a promising opportunity for the company.
Reflecting a positive trend in consumer behavior, American Express witnessed an 8% increase in consumer spending in the United States compared to the previous year. Additionally, SME spending saw a marginal uptick of 1%, signaling further growth potential in this segment. Despite some softness in SME performance, AmEx remains optimistic about the future, maintaining revenue growth expectations of 9% to 11% and a profit forecast of $12.65 to $13.15 per share for 2024.
Looking ahead to its investor day on April 30, AmEx intends to outline its strategic approach to engaging premium consumers and small businesses in the U.S. This event will also shed light on the company’s revenue prospects related to its Gen Z and millennial customer base, a demographic that holds significant value in the credit card industry. Amidst industry shifts like Capital One Financial’s acquisition of Discover Financial, potentially creating the largest credit card issuer in the U.S., AmEx remains steadfast in its focus on executing its current strategies and plans for sustained success.
Market response to American Express has been positive, with a 3.4% uptick in the company’s shares, closing at $224.86 in New York. As the credit card industry continues to evolve, AmEx’s ability to adapt and innovate will be crucial in maintaining its competitive edge. With a solid foundation in serving affluent customers and SMEs, the company is poised for continued growth in the dynamic financial landscape.