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Even as decades-high inflation pressures household budgets, American Express (NYSE:AXP) has remained so far insulated from feeling a hit as the company’s affluent customer base shrugged them off.
Shares in American Express were up 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 typically strong holiday season saw AmEx’s customers showing a scant response to inflationary pressures to 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.
The results come after rivals Visa (NYSE:V) and Mastercard (NYSE:MA) warned that revenue growth would slow through this year as the pandemic-driven pent-up travel demand begins to ebb.
Still, the change in economic forecasts and a worsening operating environment for lenders prompted the New York-based firm to stockpile more rainy-day funds, just in case its customers are unable to pay back the debt on their cards.
Americans have begun to see the effects of an economic slowdown as the cost-of-living crisis worsens.
Provisions for credit losses were $1.03 billion in the reported quarter, compared with $53 million a year ago.
Amex reported 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 excluding interest expense increased 17% to $14.18 billion in the quarter.
