American Express stock climbs after dividend boost, upbeat earnings forecast

American Express Co. exceeded $50 billion in annual revenue last year for the first time, buoyed by continued strong spending levels among its customer base.

While the card giant came up short of profit expectations for the fourth quarter, it delivered an upbeat earnings outlook for the full year ahead. The company also announced that it would be boosting its dividend by 15%.

Shares were up 5% in morning trading Friday.

American Express

logged fourth-quarter net income of $1.57 billion, or $2.07 a share, compared with $1.72 billion, or $2.18 a share, in the year-ago quarter. The FactSet consensus was for $2.23 a share.

Quarterly revenue net of interest expense rose to $14.18 billion from $12.16 billion, while analysts were looking for $14.23 billion. Annual revenue came in at $52.86 billion.

For the full year, the company expects to grow revenue by 15% to 17% and see $11.00 to $11.40 in earnings per share, both of which are ahead of what analysts were modeling. The FactSet consensus was for $58.82 billion, which would be about 11% above 2022 levels. Analysts were also expecting $10.53 in EPS.

The outlook is “above where we thought we would have been a year ago,” Chief Financial Officer Jeff Campbell told MarketWatch. It’s also “accompanied by a 15% increase in our dividend, which I think demonstrates confidence in our guidance.”

American Express intends to increase its quarterly dividend to 60 cents a share from 52 cents a share.

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American Express noted that total provisions for credit losses were $1.03 billion, compared with $53 million a year earlier. The increase reflects a $462 million reserve build, compared with a $168 million net reserve release a year before, along with higher net write-offs in the latest period.

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While American Express expected some uptrend in write-off and delinquency rates as the impact of pandemic-era stimulus benefits subsided, Campbell said that the metrics have trended up more slowly than he expected. These credit metrics are still below pre-pandemic levels, and Campbell doesn’t expect them to get back to pre-pandemic levels during 2023.

“That’s a contrast to what you have seen others say over the past few weeks,” he said. American Express has “an even more premium mix of customers” than it did when the pandemic began, he noted, helping to fuel the company’s optimism.

Total network volume was $413.3 billion for the latest quarter, up from $368.1 billion a year before. Campbell pointed to “strong spending patterns” in the U.S. and elsewhere, “including in places you might not expect, like Europe.”

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