American Express Co. AXP -1.66% is seeing consumer spending start to normalize as Covid-19 vaccinations pick up in the U.S.
Spending in travel and entertainment categories rose 40% in March from February and bookings through American Express Travel jumped by 50% in the first quarter compared with the fourth quarter, Chief Financial Officer Jeffrey Campbell said in an interview Friday. Mr. Campbell said the number of people signing up for the company’s co-branded cards with Delta Air Lines Inc. rose 90% in the quarter compared with the fourth quarter.
Card companies took a hit over the past year as lockdowns to stop the spread of the coronavirus led consumers to spend less on travel and entertainment.
Mr. Campbell said there is an inflection point around the improving economy and increase in vaccinations.
“People are finally able to exercise the pent-up demand for travel that we believed in the whole time,” he said.
Billed business, or the amount spent on its cards, rose 6% in the first quarter from a year earlier adjusted for currency fluctuations. That measure fell by half for the travel and entertainment category during the quarter, compared with a year earlier, but it rose in March compared with declines in January and February.
While travel and entertainment spending is showing signs of improving, Mr. Campbell said the company doesn’t think cross-border travel will have fully returned to its 2019 level by 2022.
“In 2022, we’re really assuming…that consumer travel and entertainment spending is mostly back to where it was pre-pandemic,” Mr. Campbell said on the company’s earnings call Friday, adding that “domestic travel in the U.S. and around the globe will be the fuel that gets us to that level.”
Even the U.S. economy and consumer behavior have started to normalize, the company saw e-commerce spending rise 23% year over year.
“As that physical retail has come back it has not cannibalized the growth we had seen in online and e-commerce,” Mr. Campbell said in the interview.
For the quarter, American Express had a provision expense benefit of $675 million. The company’s provision a year earlier to cover potential credit losses was $2.62 billion.
Profit for the first quarter was $2.24 billion, up from $367 million a year earlier. Earnings per share were $2.74, topping Wall Street’s consensus of $1.61 a share, according to FactSet. A year ago, earnings were 41 cents a share.
Revenue, net of interest expense, fell 12% to $9.06 billion, while Wall Street was expecting $9.21 billion.
American Express shares were down 2.4% at $143.65 in morning trading.
Write to Allison Prang at allison.prang@wsj.com
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