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American Express Co. saw net write-offs increase slightly in the latest quarter relative to a year before, but the company on Friday still came in ahead of Wall Street expectations with its financial forecasts for 2024.
Shares were rocketing 8.7% in morning trading Friday and on pace for their largest single-day percentage gain since they rose 10.5% after the company’s fourth-quarter report a year ago. The stock, which recently changed hands at $204.07, is also tracking toward a new all-time high. That would mark its first record close since Feb. 16, 2022, when it finished at $198.38, according to Dow Jones Market Data.
Total revenue net of interest expense came in at $15.8 billion, up 11% from the $14.2 billion that Amex
AXP,
reported a year prior. Analysts had been looking for $16 billion.
Amex’s billed business was up 6% to $379.8 billion. “We continued to drive strong customer engagement, and demand for our premium products remained robust,” Chief Executive Stephen Squeri said in a release.
International spending grew by 13%, while spending by U.S. consumers was up 7%. Internationally, Amex has a “very affluent customer base,” even more so than in the U.S., and “very premium positioning,” according to Christophe Le Caillec, the company’s chief financial officer.
“People are traveling and entertaining quite a lot,” he told MarketWatch in regard to the international business.
The company generated net income of $1.9 billion, or $2.62 a share, compared with $1.6 billion, or $2.07 a share, in the year-prior period. Analysts had been modeling $2.64 a share.
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Amex’s total provisions for credit losses increased to $1.4 billion from $1 billion. The company said it had higher net write-offs, though this was partially offset by a lower net reserve build of $400 million, compared with $492 million a year before.
Though Amex’s net write-off rate ticked up to 2% from 1.8%, Le Caillec noted the rate remains below the 2.2% seen prior to the pandemic, which “at that time was best in class.”
“I expect that rate to continue to tick up a little bit to normalize,” Le Caillec said, although he maintained that Amex stands out nicely relative to competitors. “I listen to all of our peers as well who recorded their credit-card numbers, and the distance between American Express and our peers is increasing.”
Capital One Financial posted a 3.2% net charge-off rate for the December quarter, while Discover Financial’s was 4.1%.
For the full year, Amex models 9% to 11% revenue growth, as well as earnings per share of $12.65 to $13.15. The FactSet consensus was for $66.3 billion in revenue, which implied expectations for about 9% growth, along with $12.38 in EPS.
“Looking ahead, we continue to run the business with a focus on our aspiration of revenue growth of [10%-plus] and mid-teens EPS growth,” Squeri said in the release.
“Internally we feel good about where we are and what we’re going to do in 2024,” Le Caillec told MarketWatch.
Amex disclosed a planned dividend increase of 17%. The company’s quarterly dividend will be going up to 70 cents a share from 60 cents a share, starting with the first-quarter dividend declaration.
“Although we are seeing fee revenue growth slow, the EPS growth guide of 13-17% exceeds consensus at ~10% and therefore, we expect the stock to trade in line with the market today,” Piper Sandler’s Kevin Barker wrote in a note to clients.
