American Express Earnings Surge with Holiday Shopping Boost

As the holiday season comes to a close, American Express (AXP) has reported a surge in earnings, driven by increased consumer spending and a boost in card fees. The company's fourth-quarter results, released on January 24, 2025, showed a 9% year-over-year increase in consolidated total revenues, net of interest expense, to $17.2 billion. Net income also rose to $2.2 billion, or $3.04 per share, compared to $1.9 billion, or $2.62 per share, in the prior year.



The strong performance was primarily driven by three key factors:

1. Increased consumer spending: American Express saw a significant increase in spending among its card members during the holiday season. Billings growth accelerated to 8% in the fourth quarter, driven by stronger spending from both consumer and commercial customers. This surge in spending contributed to the company's overall revenue growth.
2. Higher net interest income: American Express benefited from growth in revolving loan balances, which supported higher net interest income. As consumers and businesses carried balances on their credit cards, the company saw an increase in interest income.
3. Accelerated card fee growth: The company reported accelerated card fee growth, which was another key driver of its revenue increase. This suggests that American Express has been successful in increasing fees for its card services, attracting more card members, and retaining existing ones.



American Express' CEO, Stephen Squeri, expressed confidence in the company's outlook for 2025, forecasting revenue growth of 8-10% and earnings per share in the range of $15 to $15.50. Analysts polled by FactSet expect $15.24 per share, indicating that the company's guidance is in line with market expectations.

To maintain this momentum, American Express can focus on several strategies:

1. Innovation and value-added services: By continuously innovating and offering new services, such as premium rewards programs, travel benefits, and cashback offers, American Express can attract and retain more card members, leading to increased card fees.
2. Expanding partnerships and networks: American Express can grow its card fee revenue by expanding its partnerships with merchants, financial institutions, and other networks. This can help the company reach a larger customer base and increase its market share.
3. Maintaining strong brand recognition: American Express has a strong brand that is synonymous with luxury and high-quality service. By maintaining and enhancing its brand image, the company can continue to attract affluent customers who are willing to pay higher fees for its premium credit card services.

In conclusion, American Express' earnings surge with the holiday shopping boost demonstrates the company's ability to capitalize on increased consumer spending and accelerated card fee growth. With a strong outlook for 2025, American Express is well-positioned to continue its revenue growth and solidify its position as a leading global integrated payments company.