© Reuters. FILE PHOTO: Credit card is seen in entrance of displayed American Express emblem on this illustration taken, July 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
By Sri Hari N S and Niket Nishant
(Reuters) -American Express forecast a better-than-expected revenue for 2024 on hopes that its prosperous prospects will probably be resilient with their spending even amid elevated rates of interest, sending its shares to an all-time excessive on Friday.
The New York-based bank card large additionally reported file income for 2023, a yr which many analysts had feared may usher in a recession and crimp buyer spending.
American Express (NYSE:), helped by its prosperous buyer base, has been in a position to navigate a difficult monetary panorama extra easily in comparison with a few of its friends.
High-earning people are much less delicate to inflation and the surge in borrowing prices, which has apprehensive prospects 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 stated.
The firm additionally stated it was planning to extend its dividend by 17% beginning within the first quarter of 2024.
American Express’ shares have been up 7.3% at $201.76.
“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 stated.
NII, the distinction between earnings earned on loans and paid out on deposits, is extra delicate to the rate of interest atmosphere in comparison with low cost income, the charge that AmEx earns for facilitating transactions.
NII development is predicted to reasonable in 2024, American Express CFO Christophe Le Caillec stated.
The firm forecast 2024 earnings per share between $12.65 and $13.15, greater than analysts’ estimates of $12.41, in keeping with LSEG information.
However, some warning prevailed, with AmEx elevating its mortgage loss provisions within the fourth quarter to $1.44 billion, in contrast with $1.03 billion a yr earlier.
The firm reported a revenue of $2.62 per share, up from $2.07 per share a yr earlier.
Billed enterprise, which represents the transaction values on AmEx playing cards and different fee merchandise, rose 6% to $379.8 billion within the fourth quarter.