American Express: solid outlook and 15% increase in the dividend – 01/27/2023 at 14:42

(AOF) – American Express is expected to rise thanks to a favorable outlook and an increase in the dividend. In the fourth quarter, the credit card issuer posted net income down 9% to $1.57 billion, or $2.07 per share. Earnings per share, however, came in at 13 cents below consensus. Its revenues jumped 17% to $14.18 billion while Wall Street was anticipating $14.22 billion.

American Express posted a cost of risk of 1.03 billion dollars against 53 million dollars a year earlier.

This year, the company now expects earnings per share of $11 and $11.40, compared with a Refinitiv consensus of $10.55. Revenues are expected to rise 15% to 17%.

Other good news, the quarterly dividend increases by 15% to 60 cents per share.


The negative effects of rising interest rates

The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.

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