AmEx shrugs off slowdown worries after forecasting upbeat full-year profit

  • Forecasts FY profit above Wall Street ests
  • Expects spending momentum to continue
  • AmEx shares hit eight-month high

Jan 27 (Reuters) - American Express Co's (AXP.N) upbeat profit forecast for the year on Friday eased worries of economic uncertainty denting consumer spending and sent its shares up 10% in early trading.

While decades-high inflation pressures household budgets and roils the economy, AmEx's affluent customer base has insulated it from much of the pain felt by companies in other sectors.

Chief Financial Officer Jeff Campbell said on a call with analysts that although the U.S. economy shrank in the first two quarters of 2022, the credit card company still managed to grow revenue by 25% for the year.

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.

Jefferies analysts said although the forecast might "appear aggressive" in light of sentiment around a potential macroeconomic slowdown, it reflected momentum.

Reuters Graphics

The results came shortly after rivals Visa (V.N) and Mastercard (MA.N) warned that growth would slow through this year as the pandemic-driven travel demand begins to ebb.

Even so, Campbell told Reuters that the company continues to remain optimistic about travel recovery going forward.

"We had a very strong quarter with travel across borders and national travel and feel really good about the trends there," Campbell added.

A typically strong holiday quarter saw AmEx's customers splurge on gifts, travel, and entertainment, driving a 12% increase in total network volumes.

However, the New York-based firm set aside more rainy-day funds, given a gloomy economic outlook.

Provisions for credit losses were $1.03 billion in the reported quarter, compared with $53 million a year earlier.

AmEx reported a profit of $2.07 per share for three months ended Dec. 31, missing analysts' estimates of $2.22 per share.

Total revenue increased 17% to $14.18 billion.

Reporting by Manya Saini in Bengaluru; Editing by Sherry Jacob-Phillips and Anil D'Silva

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