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The outlook for card companies is improving as government stimulus and vaccine rollouts fuel an economic recovery, helping the industry recover from a pandemic-driven slump in non-essential consumer spending last year.
“We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business, Chief Executive Officer Stephen Squeri said in a statement.
Consultancy firm McKinsey said in a report last month that overall credit-card spending is recovering, with figures for the last six months matching the pre-pandemic levels recorded a year earlier.
In the first quarter, American Express (NYSE:AXP) posted a benefit of $675 million from the release of $1.05 billion from its loan-loss reserves. It had built reserves of $1.7 billion a year earlier.
Net income rose to $2.74 per share from 41 cents per share a year earlier, beating analysts’ estimates of $1.61 per share, Refinitiv IBES data showed.
The credit card issuer’s total revenue, excluding interest expense, fell 12% to around $9 billion.
Travel and entertainment-related spending on AmEx cards, adjusted for foreign exchange fluctuations, fell 50% as people continued to hunker down at home.
Spending on goods and services on AmEx cards rose 6% from a year earlier on a forex adjusted basis.
