American Express warned of higher operating costs this year as the credit card issuer spends heavily on rewards programs to attract customers in an increasingly crowded market, sending its shares down 2.5% on Friday.
The credit card issuer has been offering juicer signup bonuses lately. Â They have also signed partnership deals with a number of companies in a move to attract and retain customers. The company in 2018 renewed a partnership with Delta Air Lines. Bonuses on those cards have been significantly better lately. There’s also these targeted offers with no lifetime restrictions.
We’ve also seen better bonuses on Membership Rewards cards and for referrals.
Card reward expenses jumped 9% in the second quarter to $2.65 billion, compared with a 4% rise in the first quarter. Total expenses rose 9.2% in the quarter ended June 30 from a year earlier, while total revenue rose 8.4% to $10.84 billion.
Amex said its loan portfolio increased 10% to $83.2 billion in the quarter, while loan loss provisions grew by about 7%. The company said it now expects provisions to rise 20% this year, down from its earlier forecast of mid-20% range, Reuters reports.
