Buffett Says AmEx Well Positioned for Competition From JPMorganby and
American Express is ‘quite a castle,’ Berkshire CEO says
AmEx’s first quarter was a ‘blowout’ success, Buffett says
American Express Co. is well-positioned to defend against rivals seeking to win wealthy customers, billionaire Warren Buffett said Monday.
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.
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.