American Express Co. said customer spending on its network climbed to a record last quarter, and the credit-card giant predicted that revenue and earnings for this year will surge well above what analysts estimated. Shares of the company jumped more than 5%.
(Bloomberg) — American Express Co. said customer spending on its network climbed to a record last quarter, and the credit-card giant predicted that revenue and earnings for this year will surge well above what analysts estimated. Shares of the company jumped more than 5%.
While total volume on AmEx’s network increased less than expected in the final three months of the year, the record number of new cardholders AmEx added in 2022 should help revenue climb as much as 17% in 2023, the company said. That’s higher than the 11% analysts in a Bloomberg survey were expecting.
“Our performance demonstrates that our strategy is working, and our business is in an even stronger position today than before the pandemic,” Chief Executive Officer Stephen Squeri said in a statement Friday.
Squeri said earnings per share should jump to a range of $11 to $11.40. Analysts were estimating $10.52.
The shares rose 5.7% to $164.75 at 7:31 a.m. in early New York trading.
AmEx has been tweaking rewards on many of its cards, which helped it add millions of new cardholders last year. The credit-card giant has also benefited from the rebound in travel and dining.
AmEx set aside $1.03 billion in provisions for souring loans after net charge-offs rose. The move weighed on profit, which dropped 9% to $1.57 billion, or $2.07 a share.
Expenses increased as AmEx spent more on compensation and cardmember rewards, with total costs coming in at $11.3 billion. That compares with the $11 billion average of analyst estimates compiled by Bloomberg.
“We’re not oblivious to all the economic uncertainty,” Chief Financial Officer Jeff Campbell said in an interview. But “our business is not representative of every sector of the economy. We run the company based on what we see.”
Campbell said the firm’s new guidance is better than he would have predicted a year ago. The gains came because of “great progress with our most premium products,” including a record number of Platinum cardholders added last year, he said.
AmEx is planning to increase its quarterly divided to 60 cents a share beginning in the first quarter, up from 52 cents.
(Updates with comments from CFO starting in ninth paragraph.)
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