AmEx profit beats expectations as card spending hits record levels

[NEW YORK] American Express exceeded Wall Street estimates for fourth-quarter profit on Tuesday as spending on its credit cards jumped to record levels.

The company has enjoyed a surge in transaction volumes following the return of pre-pandemic habits like dining out and international travel, despite some turbulence late last year due to the Omicron variant.

"Our investment strategy enabled us to reach record levels of card member spending, maintain customer retention and satisfaction above pre-pandemic levels, increase new card acquisitions, grow our loan balances," chief executive officer Stephen Squeri said in a statement.

The credit-card giant expects the momentum to continue in 2022, estimating annual net revenue to grow between 18 per cent and 20 per cent and earnings per share of US$9.25 to US$9.65.

In the quarter to Dec 31, the New York-based company's total revenue excluding interest expense rose 30 per cent to around US$12.15 billion.

Net income came in at US$1.7 billion or US$2.18 per share, compared with US$1.44 billion or US$1.76 per share a year earlier.

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Analysts on average were expecting a figure of US$1.87 per share, according to Refinitiv IBES data.

The company, however, saw a 29 per cent surge in expenses due to increased compensation and higher usage of travel-related benefits.

The expense jump was in line with figures from other major financial institutions, which have started feeling the pinch of inflationary pressures.

REUTERS