American Express profit rises, but it sets aside more money for possible defaults

American Express saw its profit and revenue climb in the second quarter and credit card use is rising, but the company's stock slipped before the market open as it set aside more money for possible defaults on payments.

The card issuer earned $2.17 billion, or $2.89 per share, topping Wall Street expectations for $2.80, according to analysts surveyed by Zacks Investment Research. A year earlier the company earned $1.96 billion, or $2.57 per share.

Total provisions for credit losses were $1.2 billion. In the prior-year period it was $410 million, the New York company said, citing higher net write-offs and a net reserve build of $327 million, compared with a net reserve build of $58 million a year ago.

Shares fell nearly 4% before the market opened Friday.

Revenue, net of interest expense, climbed to $15.05 billion from $13.4 billion, mostly due to higher average loan volumes and increased card member spending. That was short of Wall Street projections for $15.42 billion.

Card member spending rose 8%, on a constant currency basis, driven by double-digit growth in U.S. consumer and international card member spending. People continued to spend on travel and entertainment, with the category up 14% in the quarter.

Millennial and Gen Z consumers made up more than 60% of new accounts acquired worldwide. Their spending increased 21% in the U.S. from a year earlier.

Consumer spending has remained strong despite elevated inflation and the job market remains strong.

The Commerce Department reported this week that retail sales rose 0.2% from May to June. Economists Tuesday focused on data that excludes volatile autos, gas, building materials and food services, which rose a solid 0.6% in June. That 0.6% figure is used to help calculate overall economic growth in the U.S., and it was a pretty strong showing in June.

American Express Co. maintained its full-year forecast for earnings of $11 to $11.40 per share and revenue growth of 15% to 17%.