American Express sees upbeat 2023 earnings on rising spending trend

American Express Co on Friday forecast full-year earnings above estimates from Wall Streetas the US credit card company banked on expectations that its mostly affluent customers will continue to spend despite economic uncertainty.

Even though a inflation At multi-decade highs straining household budgets, American Express hasn’t felt an impact thus far, as the company’s wealthy client base has refused to cut spending.

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

The results came shortly after rivals Visa and Mastercard warned their revenue growth would slow later this year as post-pandemic travel demand begins to wane.

The change in economic forecasts and the deteriorating operating environment for lenders led the New York-based company to raise more funds for contingencies.

Over the holiday season, AmEx customers barely reacted to inflationary pressures and instead spent on gifts, travel and entertainment, helping to support cardmember spending volumes.

Total network volumes increased 12% in the quarter, driven by continued buoyancy in travel and leisure spending.

Provisions for credit losses totaled $1.03 billion in the quarter, up from $53 million a year ago.

AmEx posted a fourth-quarter profit of $2.07 per share for the three-month period ended December 31, below analyst estimates of $2.22 per share.

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