AmEx raises revenue forecast due to higher travel spending

American Express credit cards are pictured in this illustration March 17, 2016. REUTERS/Kai Pfaffenbach/File Photo

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July 22 (Reuters) – American Express Co’s (AXP.N) quarterly card spending hit a record high as pandemic-weary travelers shrugged off rising airfares to crowded airports, helping the company to increase its annual revenue forecast and increase its shares by 5%.

The credit card giant also beat April-June earnings estimates and joined major U.S. banks, including JPMorgan Chase & Co (JPM.N), in underscoring the resilience of consumer spending in the face of downturns. uncertain economic outlook.

Chief executive Steve Squeri, however, said loss rates would slowly increase, although they would remain well below pre-pandemic levels this year.

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The company added $410 million in provisions for credit losses, mirroring similar accumulations at major U.S. banks, and said it plans to set aside more funds.

“What I’ve seen is a correlation between… people losing their jobs and not being able to pay their bills. And so that’s potentially a problem going forward,” Squeri said.

The number of Americans filing for unemployment benefits rose for a third straight week last week to its highest level in eight months, a sign that the economy was slowing due to rising interest rates and high inflation.

TRAVEL BOOM

For now, however, AmEx is benefiting from bottled demand and the easing of COVID-19 restrictions that sparked the strongest summer travel season since the pandemic began.

Strong consumer spending has been a feature of the company’s earnings for several quarters, but the recovery in international and business travel has been the main driver this time around, said Morningstar equity analyst Michael Miller.

He added that “a growing base of premium cardholders is creating a virtuous cycle for American Express.”

The company added 3.2 million new proprietary cards in the quarter ended June 30. Its net profit of $2.57 per share beat the $2.41 expected by analysts, according to data from Refinitiv.

Rivals Visa and Mastercard announce earnings next week.

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Reporting by Manya Saini and Mehnaz Yasmin in Bengaluru; Editing by Aditya Soni

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