New Amex cardholders and international growth drove strong Q4

The news: American Express’ total revenues net of interest expense jumped 9% YoY in Q4, versus 11% a year ago, per its earnings release.

Strong cardholder spending drove revenues, as did higher net interest income from revolving loan balances and card fees.

• Amex’s US consumer network volume increased 9% YoY, up from 7% growth in Q4 2023.
• Overall loan and card member receivables grew 9% YoY, compared to 13% last year.
• And net card fees climbed 19% YoY, versus 17% last year.

What propelled card spend:

• Travel and entertainment (T&E) billed business shot up 10% YoY. This was led by airline spend which grew 13% YoY, compared to just 6% YoY the prior year.
• “Robust holiday spend” boosted overall growth, Amex CEO Steve Squeri said—across both goods and services (G&S) and T&E. We forecast that total US holiday retail sales grew 4.3% YoY.
• International business is Amex’s fastest-growing segment, per Squeri, growing 15% YoY during the quarter. In Q4, Amex reached an average of 80% coverage across its top 12 international countries. It’s also been investing heavily in international card acquisitions, Squeri said.
• Amex boasted a record 13 million new card acquisitions in 2024. Millennials and Gen Zers made up more than half of these accounts and currently compose one-third of total balances. Much of this growth is directly related to increasing marketing spend (up 30% for 2024) and adding welcome incentives, CFO Christophe Le Caillec said.

How Amex consumers are faring: Amex’s delinquencies and charge-offs are still below pre-pandemic levels. The company has been able to maintain this—unlike other issuers—thanks to its largely premium cardholder base.

• The 30-day delinquency rate in Q4 was 1.3%. In Q4 2019, the rate was 1.5%.
• The net charge-off rate in Q4 was 1.9%, versus 2.2% before the pandemic.

Our take: Amex is heading into 2025 in a strong position. We expect Amex’s card network transaction value will grow 6% YoY in 2025, per our forecasts.

• Big investments in international acceptance and marketing are paying off.
• And it has escaped much of the concerns around consumer financial health and elevated delinquencies thanks to its higher income clientele.

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