AMERICAN Express forecast a better-than-expected profit for 2024 on hopes that its affluent customers will be resilient with their spending amid elevated interest rates, sending the company’s shares up nearly 3 per cent before the bell on Friday (Jan 26).

The New York-based company also reported record revenue for 2023, a year which many analysts feared could bring in a recession and crimp customer spending.

AmEx, helped by its affluent customer base, has been able to navigate a tricky financial landscape more smoothly compared to some of its peers.

High-earning individuals are less sensitive to inflation and the surge in borrowing costs, which has worried customers in lower-income brackets.

“We have achieved what we set out to do, and we are ahead of where we thought we’d be on our journey,” American Express CEO Stephen Squeri said.

However, some caution prevailed, with the credit card giant raising its loan loss provisions in the fourth quarter to US$1.44 billion, compared with US$1.03 billion a year earlier.

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Eleven rate hikes by the US Federal Reserve have made borrowing expensive and increased risks of more defaults, especially as credit card debt is typically costlier than other loans.

AmEx’s 2024 forecast would not be impacted even if the aggressive rate cuts that markets are expecting do not materialise, CFO Christophe Le Caillec said.

“We’re very much hedged from (the interest rate) standpoint ... entering 2024 with a lot of confidence.”

AmEx posted a profit of US$2.62 per share for the three months ended Dec 31, up from US$2.07 per share a year earlier.

The company’s total revenue for the fourth quarter rose 11 per cent to US$15.80 billion. For 2023, its revenue rose 15 per cent to US$60.52 billion.

It forecast 2024 earnings per share between US$12.65 and US$13.15, higher than analysts’ estimates of US$12.41, according to LSEG data.

Billed business, which represents the transaction values on AmEx cards and other payment products, rose 6 per cent to US$379.8 billion in the fourth quarter.

The results come a day after peer Visa posted upbeat quarterly results fuelled by strong spending on travel and holiday shopping.

However, smaller peers Discover Financial and Capital One saw lower profits in the quarter due to higher credit loss provisions. REUTERS