American Express: Q4 Earnings Snapshot

American Express (AXP) is set to report its fourth-quarter earnings on Friday, January 24, before the opening bell. As the company prepares to unveil its financial performance, investors are eager to see if it can maintain its momentum and continue to deliver strong results. In this article, we will take a closer look at the key drivers behind American Express' earnings performance and what investors can expect from the upcoming earnings report.



Key Drivers Behind American Express' Earnings Performance

American Express' strong earnings performance in the fourth quarter was driven by several key factors:

1. Growth in Card Member Spending: The company reported a 30% increase in total revenues net of interest expense, primarily due to growth in Card Member spending compared to the prior year. This growth reflects the resilience of American Express' premium customer base, which is less impacted by economic downturns and inflation.
2. Improved Credit Metrics: American Express experienced lower net write-offs and reserve releases compared to the prior year, leading to a decrease in provisions for credit losses. This improvement indicates that the company's credit quality remains strong, with credit metrics near historic lows.
3. Increased Marketing Investments: The company invested more in marketing to build growth momentum, which contributed to higher expenses. However, these investments also helped attract new Card Members and maintain high retention rates.
4. Growth in Net Interest Income: American Express' net interest income increased by 7.4% year-over-year in the third quarter, driven by higher loan volumes and stable interest rates. This growth is a key driver of revenue increases for the company.



What to Expect from the Upcoming Earnings Report

As American Express prepares to report its fourth-quarter earnings, investors will be closely watching several key metrics:

1. Earnings per Share (EPS): Analysts expect American Express to report EPS of $3.04, up from $2.62 in the year-ago quarter. This would represent a 15.3% increase in EPS.
2. Revenue: Analysts expect American Express to report quarterly revenue of $17.16 billion, up from $16.6 billion in the year-ago quarter. This would represent an 8.7% increase in revenue.
3. Credit Metrics: Investors will be closely watching American Express' credit metrics, including net charge-offs and delinquency rates, which impact the company's profitability and risk profile.
4. Net Interest Income: American Express' net interest income has been a key driver of revenue increases for the company. Investors will be looking for continued growth in this metric.



In conclusion, American Express' strong earnings performance in the fourth quarter was driven by growth in Card Member spending, improved credit metrics, increased marketing investments, and growth in net interest income. As the company prepares to report its fourth-quarter earnings, investors will be closely watching key metrics such as EPS, revenue, credit metrics, and net interest income to gauge its performance and future prospects. With a strong track record of delivering results, American Express is well-positioned to continue its momentum and deliver another solid earnings report.