Buffett Says AmEx Well Positioned for Competition From JPMorgan

  • American Express is ‘quite a castle,’ Berkshire CEO says
  • AmEx’s first quarter was a ‘blowout’ success, Buffett says

Buffett Struggling to Find the Next Big Thing

American Express Co. is well-positioned to defend against rivals seeking to win wealthy customers, billionaire Warren Buffett said Monday.

Warren Buffett

Photographer: Daniel Acker/Bloomberg

AmEx’s first quarter “was really a blowout,” with strong growth in new cardholders and customer spending, Buffett said Monday in an interview with Fox Business Network, where he was asked about increased competition from JPMorgan Chase & Co. Buffett, 86, is chairman and chief executive officer of Berkshire Hathaway Inc., AmEx’s largest shareholder.

AmEx, the largest U.S. credit-card issuer by purchases, is “quite a castle,” said Buffett, who favors companies that have a moat of protection. “American Express is a very strong card. They’ll always have a lot of competition. It’s a big field, and a lot of people would like a piece of the pie.”

AmEx in 2015 failed to renew an agreement with Costco Wholesale Corp., which was its largest co-brand partner. The move sparked the lender’s worst stock slump since the financial crisis. Last year, JPMorgan introduced its Sapphire Reserve card, causing a temporary increase in attrition at AmEx.

Ken Chenault

Photographer: Andrew Harrer/Bloomberg

CEO Ken Chenault has shuffled American Express’s top managers, boosted spending on marketing and sweetened rewards on the Platinum portfolio to keep customers. AmEx’s first-quarter revenue exceeded analyst estimates. Excluding Costco’s contribution to year-earlier results, revenue rose 6.2 percent -- an acceleration from the fourth-quarter’s 5 percent growth rate.

Berkshire owns about $12 billion of AmEx stock. Chenault’s company has climbed about 5.4 percent this year in New York trading.

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