The global Covid-19 pandemic caused a lull in business as lockdowns and restrictions became the norm. American Express took a hit in the pandemic, with not many Americans willing to travel, shop or, dine out. Customers who usually kept a revolving balance paid off their debts. Spending on individual and corporate credit cards also dropped dramatically.
But all that is changing as businesses are getting back on track as coronavirus vaccines become more common and millions of vaccinations are being administered to Americans daily. Bored Americans are ready to step out to spend on shops, restaurants and, entertainment venues. The surge in revenue spells a windfall for American Express.
According to the Chairman and CEO of Amex, Mr. Stephen Squeri, Amex is witnessing a surge in revenue which is at an all-time-high exceeding pre-pandemic levels in June. Amex is witnessing clients spending grow exponentially from the prior quarter with the largest portion of this spending growth coming from their younger customers.
Shares of the New York company climbed 3.4 percent at the opening bell. Revenue, net of interest expense, climbed to $10.24bn from $7.68bn last year.
Demand for fee-based Platinum Cards is getting stronger even though Amex said earlier this month that it will increase the fee on its flagship Platinum Card. The annual fee is for the Platinum card will increase from $550 to $695. In this quarter alone, American Express has registered roughly 2.4 million new cards.
American Express earned $2.28bn for the three months which ended June 30. The current quarter included $866m in credit reserve releases for the New York company. For the current quarter, the consolidated provisions for Amex’s credit losses caused a benefit of $606m for the company. The reason for this was primarily because of the lower net write-offs and reserve releases.
There are reports of rising infections in some regions of the US that do not seem to be of great concern because the rate of vaccination is growing. Despite a rise in covid cases in some parts of the US, Amex appears to be optimistic that the momentum gathered by the company in the US will continue to give strength to their core business by re-invigorated customers.