AmEx forecasts upbeat full-year profit on buoyant spending trends

Jan 27 (Reuters) – American Express Co (AXP.N) 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 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 (V.N) and Mastercard (MA.N) 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.

Reporting by Manya Saini in Bengaluru; Editing by Sherry Jacob-Phillips

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