AmEx quarterly profit exceeds expectations on cost control

By Niket Nishant and Pritam Biswas

(Reuters) -American Express reported third-quarter profit above Wall Street estimates on Friday, benefiting from disciplined expense management that helped cushion a blow from softer fee growth.

Shares of AmEx fell nearly 5% even as the credit card giant raised its profit forecast for 2024.

The company's affluent customers have allowed it to maintain relatively smaller provisions for credit losses compared with peers that serve a broader spectrum of customers, including those with lower income.

It has also showed restraint in managing rewards and other expenses, allowing it to outdo profit expectations even when revenue growth decelerates.

"(This quarter is) another proof point of management's ability to flex expenses to hit earnings per share (EPS) targets when top line is softer," said Citi analyst Keith Horowitz.

AmEx's total expenses were $12.08 billion in the quarter, lower than expectations of $12.74 billion, according to estimates compiled by LSEG.

Revenue rose 8% to $16.64 billion but fell short of the $16.67 billion estimate. Discount revenue - the fee it earns from merchants for facilitating transactions - rose 4%, while analysts had expected 5.3% growth.

"We do not need double-digit revenue growth to hit mid-teens EPS because we are disciplined with our operating expenses. Our credit is also very, very strong," Chief Financial Officer Christophe Le Caillec told Reuters in an interview.

Profit rose 2% to $2.51 billion for the three months ended Sept. 30. On a per-share basis, it earned $3.49 versus the $3.28 that analysts had forecast.

The company now sees 2024 EPS between $13.75 and $14.05, higher than the earlier range of $13.30 to $13.80.

"Expectations were elevated, but we believe the growth opportunities remain large and the valuation remains attractive," William Blair analysts said in a note.

(Reporting by Niket Nishant and Pritam Biswas in Bengaluru; Editing by Maju Samuel)