American Express Profit Gets A Boost From Holiday Shopping

On By Littum

(Bloomberg) — American Express Co . profits rose 12% as well-heeled consumers spent more than analysts expected on their credit cards over the holidays, a tailwind the company said it expects to continue.

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Billed business, or transaction volume on credit cards and other products issued by the company, rose 8% to $408.4 billion in the fourth quarter. Fourth quarter net income of $2.17 billion, or $3.04 per share. stock, slightly missed estimates.

“We exited the year with increased momentum, with billings growth accelerating to 8% in the fourth quarter, driven by stronger spending from our consumer and commercial customers during the holiday season,” CEO Steve Squeri said in a statement Friday. “We maintained our best-in-class credit performance and disciplined cost management throughout the year.”

Revenue for the full year is expected to rise between 8% and 10%, the firm said. That growth is inextricably linked to billings, Squeri said in an interview, so if spending growth continues as it did in the fourth quarter, Amex will hit the high end of revenue guidance.

Shares of the New York-based company fell 1.4% to $321.32 at 9:34 in New York. They are up 73% in the past 12 months.

“There is some euphoria in the economic environment in the United States right now,” he said. “The dollar is very, very strong.”

Given the strong dollar, Squeri expects many US-based travelers to head overseas this year.

Throughout the year, Amex continued to invest in its offerings for customers who spend big on hospitality and travel, inking a deal for restaurant and events-focused platform Tock in June and refreshing its Gold Card in July to add an annual statement of $100 credit for Resy-affiliated restaurants in the United States. Co-brand card partner Delta Air Lines Inc. said in November that the payments the airline receives from Amex for member loyalty points are on track to reach $10 billion each year over the long term.

Amex announced last week that it will pay about $230 million to resolve long-running federal investigations into its sales practices surrounding products for small business owners. Amex said that in addition to discontinuing the products in question, it took disciplinary action against those involved, conducted internal reviews and increased compliance programs.