AmEx soars most since 2020 after card spending hits record

[NEW YORK] American Express surged the most in more than a year after the card giant boosted forecasts for revenue and profit and said spending on its cards climbed to a record.

Revenue will climb as much as 20 per cent this year while earnings could reach US$9.25 to US$9.65 a share, the company said in a statement Tuesday (Jan 25). AmEx has long said 2022 would be the year it reaches goals originally set 2 years ago, before the pandemic took hold. But the new targets far surpass even those goals, which predicted revenue growth in the range of 8 per cent to 10 per cent and per-share profit of US$8.85 to US$9.25.

Overall spending on AmEx's network soared 29 per cent to US$368.1 billion in the final 3 months of last year, even as the highly contagious Omicron variant disrupted holiday plans around the world and started a fresh round of lockdowns. The spending surge helped push revenue up 30 per cent to US$12.1 billion in the quarter, which was higher than analysts had predicted.

"People are ready to get out and about again," chief executive officer Steve Squeri said on a conference call with analysts. "We'll see when Omicron peaks and when we get the next variant, but I think society is learning how to deal with this."

Shares of the company closed up 8.9 per cent to US$173.11 in New York, the biggest gain since November 2020.

AmEx also said it would raise its quarterly dividend for the first time since 2019, boosting the payout 20 per cent to 52 US cents a share beginning this quarter, according to the statement.

AmEx - long known for its travel and dining perks - has been revamping some of its most popular products and focusing more on wellness and lifestyle benefits as the pandemic drags on. When it overhauled its Platinum card last year, the New York-based company added statement credits for entertainment products, such as SiriusXM or Audible subscriptions, as well as US$25 a month toward membership with the high-end fitness club Equinox.

The company has vowed to spend more on marketing in recent quarters as it seeks to add new customers. Overall costs jumped 29 per cent to US$9.8 billion, topping the US$9.3 billion average estimate.

"The business imperatives and strategies we focused on pre-pandemic, the decisions we made when Covid-19 first hit to protect our customers and colleagues and our pivot early in the recovery cycle to ramp up investments in a number of key areas all proved to be the right moves that have been good for our business," Squeri said. "We feel very good about the future."

BLOOMBERG