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AmEx allays fears of Omicron hit with record card spending levels

AmEx allays fears of Omicron hit with record card spending levels

AMEX. American Express cards are pictured in Encinitas, California, October 17, 2011.

Mike Blake/Reuters

American Express reports record levels of spending in the fourth quarter of 2021 as customers splurged on pre-pandemic habits

American Express Company’s quarterly profit beat market estimates as consumers seeking respite from the pandemic swiped its credit card to dine out and holiday, helping the company allay fears of any big impact from the Omicron variant.

The credit-card giant’s shares surged 9% on Tuesday, January 25, after it reported record levels of spending in the fourth quarter as the economic recovery from the COVID-19 crisis and a strong jobs market encouraged customers to splurge on pre-pandemic habits.

The results mirrored remarks from the biggest US banks, which have said that consumers – who have cash in the bank – are again eager to spend and also to borrow.

Chief financial officer Jeff Campbell said in an interview he expected the trend to continue in 2022 as the new coronavirus variant only had a modest impact on travel spending, despite thousands of flight cancellations.

“When you think about the Delta variant in 2021, and now as you see Omicron in early 2022, each of those impacts has been a little milder than the one before, and we believe shorter in duration,” Campbell said.

Banking on those expectations, AmEx forecast 2022 net revenue growth of between 18% and 20% and earnings per share of $9.25 to $9.65.

Crypto plans

Company executives said on a conference call that AmEx would probably not launch a cryptocurrency card, but would consider using the digital asset as a possible redemption option in the future.

Rival Visa has several card programs that let users earn bitcoin on purchases.

In the quarter to December 31, AmEx’s revenue excluding interest expense surged by 30% as spending on travel and entertainment more than doubled.

Net income came in at $1.7 billion, or $2.18 per share, higher than analyst’s estimates of $1.87 per share, according to Refinitiv data. – Rappler.com

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