American Express, credit card provider to the wealthy, wants even more high spenders

American Express is uncovering that adjacent for a supplier of recognition cards to the affluent, it pays to absorption connected the highest of precocious rollers.

The institution precocious shifted selling dollars to its refreshed Platinum card, which carries an $895 yearly fee, and distant from no-fee currency backmost cards, CEO Stephen Squeri told analysts Friday aft the institution reported fourth-quarter results.

Doing that helps to boost wide spending levels arsenic high-end consumers proceed to thrive, a maneuver that leads to some rising interest gross from premium cards and little indebtedness defaults, executives said.

"We person the quality … to beryllium truly flexible with our selling investments, and we saw a tremendous request for premium products, peculiarly the Platinum card," Squeri said.

"The wide portfolio is dilatory getting much premium [as] the Platinum portfolio is increasing astatine a precise accelerated pace," helium added.

AmEx's strategy displacement is the latest illustration of the alleged "K-shaped" U.S. economy playing out, successful which affluent consumers proceed to walk freely portion others rein successful their expenses. Data from the paper institution shows that request for high-end products and luxury experiences is accelerating, portion purchases successful much basal categories rises astatine a slower pace.

Spending astatine luxury retailers surged 15% successful the quarter, concern and first-class airfare purchases roseate 9%, and luxury edifice spending was up 12%, CFO Christophe Le Caillec told CNBC successful an interview.

Meanwhile, spending astatine airlines and lodging much mostly was up 3% and 5%, respectively, during the quarter, showing that the richest cardmembers are driving results.

The commentary helped allay fears from analysts that the relaunch of the pricey Platinum paper past autumn hadn't gone well.

AmEx said Friday that caller paper accounts deed 2.9 cardinal astatine year-end, a diminution from the 3rd 4th and the lowest fig in the past 5 quarters, arsenic the institution focused connected its much profitable paper products.

"We are incrementally disquieted that the Platinum Card refresh isn't generating overmuch traction," said BTIG analysts led by Vincent Caintic, citing caller contention from different paper issuers and user weariness implicit precocious fees and cumbersome perks.

While the institution doesn't disclose its full fig of cardmembers, including for the Platinum card, Squeri told analysts Friday that "all of the metrics that we look astatine speaks to the information that this was a wildly palmy merchandise launch."

Still, shares of AmEx were down astir 3.5% successful midday trading aft the company's results and guidance disappointed some.

Earnings per share of $3.53 were a penny beneath the statement estimate, according to LSEG.

That was owed successful portion to higher-than-expected expenses, astatine $14.5 billion, driven by the costs of the Platinum refresh, the institution said.

"If determination is simply a rub, possibly it is that 4Q intelligibly shows the outgo of the Platinum refresh, but doesn't amusement a corresponding bump connected caller accounts," wrote Truist expert Brian Foran successful a probe note.