Finance

American Express cardholders still spending despite Trump tariffs

Published

2 months ago

April 17, 2025

American Express‘s affluent cardmembers are showing few signs of curbing their spending, and younger customers drove growth in first-quarter transaction volumes, Chief Financial Officer Christophe Le Caillec told CNBC.

Billed business on AmEx cards rose 6% in the period, or 7% when adjusted for the impact of leap year, the company reported Thursday, which shows that the bump in spending late last year continued into 2025, according to Le Caillec.

Those trends have continued into April, the CFO said, despite sharp declines in stocks this month amid concerns that President Donald Trump’s tariff policies will cause a recession.

The dynamic, which helped AmEx top expectations for first-quarter profit, shows that the company’s wealthier customer base may help to insulate it from concerns about tariffs and stubborn inflation. On the other end of the credit spectrum, Synchrony Financial, which offers store cards for dozens of popular retailers, has warned of a spending slowdown.

“There’s a lot of stability and strength, despite the news and the environment,” Le Caillec said.

Growth at AmEx came from younger cardholders, with millennial and Gen Z members spending 14% more in the quarter. Gen X and Baby Boomer cardholders showed more caution, registering 5% and 1% increases, respectively.

Le Caillec said it’s difficult to discern whether cardmembers were pulling forward purchases because of the looming tariffs, creating an artificial boost to purchase volumes, as JPMorgan executives said last week. But some small businesses may be doing so to build inventory because of concerns about the duties increasing costs, he added.

Airline slump

One category in particular gave Le Caillec confidence that the spending trends may be durable.

“Restaurant spend is up 8%,” the CFO said. “This is the ultimate discretionary expense, it’s not something you can bring forward, and so it’s really a good indicator of the strength of our cardmember base and the confidence they have.”

If there was a weak area besides the spending slowdown from older Americans, it was in airline transactions, according to the company’s earnings presentation. The category grew just 3%, or 4% when adjusted for leap year, after climbing 13% in the fourth quarter.

But while airlines, retailers and other corporations have pulled their earnings guidance on tariff uncertainty, AmEx was holding firm.

It maintained its guidance for revenue growth of 8% to 10% and earnings of $15 to $15.50 per share this year, Le Caillec said.

In the company’s presentation, though, it added a new caveat to its guidance: “Subject to the Macroeconomic Environment.”

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

9 hours ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

11 hours ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”