Holiday Cheer Boosts American Express Revenue
The festive season brought joy to American Express, as the company exceeded Wall Street revenue expectations. A surge in travel and online shopping during the holidays led to a significant increase in card usage, resulting in a 9% revenue growth to $17.18 billion in the three months ended December 31.
Wealthy Consumers Drive Spending
American Express, which primarily caters to affluent consumers, has demonstrated resilience in the face of economic uncertainty. Higher-earning individuals are less affected by inflation and elevated borrowing costs, allowing AmEx to maintain spending volumes. This demographic has been instrumental in driving the company’s growth, as they continue to splurge on luxury items and experiences.
Travel and Entertainment Lead the Way
The strongest area of growth for AmEx was travel and entertainment, with airline travel being a particular standout. This trend is expected to continue, with CFO Christophe Le Caillec citing accelerating billings growth as a key factor in achieving the company’s aspirational target of at least 10% revenue growth.
Credit Loss Provisions Decline
AmEx’s provisions for credit losses fell to $1.3 billion in the quarter, down from $1.4 billion a year earlier. The resilient economy and a series of rate cuts by the Federal Reserve have alleviated concerns around credit quality. Le Caillec emphasized that the impact of rate changes on AmEx’s economics is minimal, thanks to the company’s balance sheet and funding structure.
Rosy Outlook for 2025
American Express expects 2025 earnings per share to be between $15 and $15.50, exceeding analysts’ estimates of $15.23. The company also forecasts 2025 revenue growth between 8% and 10%, surpassing Street expectations of 8.1%. With a strong holiday season under its belt, AmEx is poised for a successful year ahead.
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