Late last year, American Express’s wealthy customers felt at ease spending more freely once more, Chief Financial Officer Christopher Le Caillect told CNBC.
After slowing down from a 7% growth rate early in the year to 6% during the second and third quarters, AmEx card spending increased 8% year over year in the fourth quarter, according to the company’s results presentation.
All consumer demographics and geographical areas experienced the year-end surge, but millennials and Gen Z users were particularly responsible, as their transaction volumes increased by 16% from 12% in the third quarter.
While baby boomers experienced a 4% increase in billings, Gen X customers spent 7% more in the fourth quarter, indicating that older groups were more frugal with their cards.
Gen Z and millennials contributed significantly to our growth, and that two percentage point acceleration offers us great hope for 2025, Le Caillec stated.
He noted that the first three weeks of this year have seen elevated transaction levels.
AmEx and rival card issuer JPMorgan Chase dominate the market for high-end credit cards, which is consistent with the belief that younger Americans spend more on experiences than on items.
Billings for travel and entertainment increased 11% during the period, while those for goods and services increased 8%. According to Le Caillec, airline spending increased 13%, with business and first class flight spending up 19%, which contributed to the increase in travel.
Following the release of results and revenue that were largely consistent with analyst estimates, AmEx’s stock dropped more than 2% during Friday’s noon trade. Over the past year, the New York-based company’s shares have surged, reaching a 52-week high on Thursday.
According to a research note released Friday by William Blair analysts lead by Cristopher Kennedy, we are encouraged by the acceleration of billings growth since we think it will be a crucial component in helping Amex reach its ambitious goal of at least 10% revenue growth. On any pullback, we continue to be purchasers.
More from CNBC
-
How China s new AI model DeepSeek is threatening U.S. dominance
-
The Federal Reserve is likely to hold interest rates steady next week. Here s what that means for your money.
-
SEC revokes unpopular banking rule that blocked Wall Street banks from adopting crypto