AmEx forecasts upbeat 2024 profit as credit card spending stays resilient
Business
AmEx forecasts upbeat 2024 profit as credit card spending stays resilient
(Reuters) - American Express (AXP.N), opens new tab forecast a better-than-expected profit for 2024 on hopes that its affluent customers will be resilient with their spending even amid elevated interest rates, sending its shares to an all-time high on Friday.
The New York-based credit card giant also reported record revenue for 2023, a year which many analysts had feared could bring in a recession and crimp customer spending.
American Express, helped by its affluent customer base, has been able to navigate a tricky financial landscape more smoothly compared to some of its peers.
High-earning individuals are less sensitive to inflation and the surge in borrowing costs, which has worried customers in lower-income brackets.
"We have achieved what we set out to do, and we are ahead of where we thought we'd be on our journey," American Express CEO Stephen Squeri said.
The company also said it was planning to increase its dividend by 17% starting in the first quarter of 2024.
American Express' shares were up 7.3% at $201.76.
NII RELIANCE
"The quarterly results and guidance reflect the strength of AmEx's financial model, though we acknowledge that revenue growth is being increasingly driven by net interest income (NII)," HSBC analyst Saul Martinez said.
NII, the difference between income earned on loans and paid out on deposits, is more sensitive to the interest rate environment compared to discount revenue, the fee that AmEx earns for facilitating transactions.
