(Reuters) -American Express Co beat estimates for second-quarter profit on Friday as increased consumer spending and an improving economy prompted it to release more funds from its loan-loss reserves.
Shares of the company rose 3% in premarket trading and were on track to open at a record high.
The reopening of the global economy is expected to unleash widespread demand for travel and shopping from consumers stuck indoors for more than 18 months, helping boost credit card transactions.
“We saw Card Member spending accelerate from the prior quarter and exceed pre-pandemic levels in June, with the largest portion of this spending growth coming from Millennial, Gen Z, and small business customers,” Chief Executive Officer Stephen Squeri said in a statement.
Squeri also said the addition of U.S. Platinum card members touched record levels in the quarter on strong demand for premium, fee-based products.
The company sold 2.4 million new proprietary cards in the quarter, while spending on goods and services on its cards grew 16% on a currency adjusted basis.
Net income rose to $2.28 billion, or $2.80 per share, for the quarter ended June 30 from $257 million, or 29 cents per share, a year earlier. Analysts had expected $1.67 per share, according to Refinitiv IBES data.
The credit-card issuer posted a benefit of $606 million due to the release of $866 million from its loan-loss reserves.
Excluding interest expense, AmEx’s total revenue rose 33% to around $10.24 billion.
Reporting by Sohini Podder in Bengaluru; Editing by Anil D’Silva