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Investing.com – American Express (NYSE:AXP) stock was trading higher by more than 3% in Friday’s premarket as write-back of provisions and higher consumer spending led to an almost nine-fold jump in its second-quarter net profit.
The lender said spending growth came from millennials, Gen Z and small businesses.
Expenses rose as card members chose to use travel-related benefits and the company made more investments in marketing.
As the macro economy improved, the credit card issuer could afford to release some of the reserves it had built to withstand contingencies. This led to a benefit of $606 million in the books in the second quarter.
Total revenue in the second quarter rose 33% year-on-year to $10.24 billion. The twin impact of reversing the provisions and higher revenue led to a 787% increase in net income to $2.28 billion.
Diluted earnings per share rose to $2.8 from 29 cents.
Analysts had expected EPS to come in at $2.8 and revenue to be $9.55 billion.
