American Express Co. (AXP.N) is pulling out the big bucks to keep its stronghold on premium credit-card users.

AmEx spent a record US$2.52 billion on rewards for customers in the fourth quarter, when it revamped its Gold card to include more travel and dining benefits and announced new locations for its Centurion airport lounges. That topped the US$2.51 billion estimate from analysts at Oppenheimer & Co.

“Look, the competition, I don’t think it’s going to slow down,” AmEx Chief Executive Officer Steve Squeri told investors at a conference last month. “We just need to be constantly prepared for it to ratchet up at any moment.”

Key Insights:

AmEx has been spending more to improve offerings for premium and small-business cardholders as competition heats up. Expenses during the quarter rose 9 per cent to US$7.7 billion, above the US$7.57 billion average of 13 analyst estimates compiled by Bloomberg.

The company’s efforts to entice customers to spend more on their cards may not be working as well as analysts hoped: Spending on the firm’s products rose 6 per cent to US$309 billion, AmEx said in a statement announcing fourth-quarter results. That compared with the US$318 billion that analysts at Sandler O’Neill & Partners estimated.

AmEx has been on a years-long campaign to be accepted at more storefronts across America as it pursues parity with Visa and Mastercard. The company has warned this will cause its discount rate -- a measure of the fees it charges retailers -- to fall. That was true in the quarter: The overall rate dipped 2 basis points to 2.36 per cent.

The company has said it doesn’t mind discount-rate pressure because it comes with more spending on its network, which should help boost revenue. But analysts had higher hopes for such revenue in the quarter, which came in at US$6.46 billion, compared with the US$6.55 billion average of analyst estimates compiled by Bloomberg. Overall revenue also disappointed.

AmEx slid 3.5 per cent to US$96 at 4:34 p.m. in New York. It has climbed 4.4 per cent this year, compared with the 7.2 per cent advance of the 68-company S&P 500 Financials Index.

AmEx said it expects profit of US$7.85 to US$8.35 a share for 2019, compared with the US$8.13 average of 29 analyst estimates compiled by Bloomberg. The firm also expects revenue growth of 8 percent to 10 per cent for the year.

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