AmEx forecasts upbeat full-year profit on buoyant spending trends By Reuters

By Manya Saini

(Reuters) -American Express Co forecast full-year profit above Wall Street estimate on Friday, as the U.S. credit card company banked on expectations that its largely well-off customers will continue to spend despite broader economic uncertainty.

Even as decades-high inflation pressures household budgets, American Express (NYSE:) has remained so far insulated from feeling a dent as the company’s affluent customer base refused to dial down on their spending.

Shares of American Express were up more than 5% in premarket trading.

AmEx forecast 2023 net revenue growth between 15% and 17% and earnings per share of $11 to $11.40. Analysts on average had expected $10.55 per share, according to Refinitiv IBES data.

The results came shortly after rivals Visa (NYSE:) and Mastercard (NYSE:) warned that their revenue growth would slow through this year as the pandemic-driven pent-up travel demand begins to ebb.

Even so, American Express Chief Financial Officer Jeff Campbell told Reuters that the company continues to remain optimistic about travel recovery going forward.

“We had a very strong quarter with travel across borders and national travel and feel really good about the trends there.”

Still, the change in economic forecast and a worsening operating environment for lenders prompted the New York-based firm to stockpile more rainy-day funds.

The typically strong holiday season saw AmEx’s customers showing a scant response to inflationary pressures, and instead, splurge on gifts, travel, and entertainment, helping sustain card member spending volumes.

Total network volumes rose 12% in the quarter, driven by continued momentum in travel and entertainment spending.

Provisions for credit losses were $1.03 billion in the reported quarter, compared with $53 million a year ago.

AmEx reported a fourth-quarter profit of $2.07 per share for the three-month period ended Dec. 31, missing analysts estimates of $2.22 per share.

Net income fell 9% to $1.57 billion, while the company’s total revenue increased 17% to $14.18 billion in the quarter.