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(Reuters) – American Express Co (AXP.N) surpassed Wall Street's forecast for third quarter earnings on Thursday and raised its annual earnings guidance due to higher credit card spending generated by the US economy.
An illustration of American Express credit card is visible on a computer keyboard in this illustration taken September 6, 2017. REUTERS / Philippe Wojazer / Illustration
The credit card issuer stated that quarterly spending by credit card customers grew 10.3 percent in the US and 5 percent in foreign markets in the three-month period ended September 30. .
Rising wages and the strength of the economy have fueled consumer spending in the United States. Last month, consumer confidence reached its highest level in 18 years.
Payment networks like AmEx and Visa Inc. (V.N) earn fees from merchants whenever a consumer slips a card that it issues. They also earn income from interest paid by customers on late expenses.
American Express is now expecting an adjusted profit for 2018 of between $ 7.30 and $ 7.40 per share, up from the previous range of $ 6.90 to $ 7.30.
According to AmEx, third-quarter net income reached $ 1.65 billion, up from $ 1.36 billion a year ago. AmEx earned $ 1.88 per share, up from $ 1.51 for the corresponding quarter of the prior year.
Analysts expected on average $ 1.77 per share, according to data Refinitiv.
Total revenues, net of interest expense, increased 9.2% to $ 10.14 billion, up from analysts' estimates of $ 10.05 billion.
AmEx shares rose 1.6% to $ 104.50 in prolonged trading on Thursday.
Reportage of Diptendu Lahiri in Bengaluru; Edited by Sai Sachin Ravikumar
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