American Express Company (NYSE: AXP) reported full-year net income of $7.5 billion (-7.5%), or $9.85 per share, compared with net income of $8.1 billion, or $10.02 per share, a year ago.

The stock surged over 10% on Friday as optimistic guidance for 2023 and dividend increase overshadowed weak Q4 results.

Total revenues net of interest expense for the full year were $52.9 billion, up 25 percent from $42.4 billion a year ago, primarily reflected growth in Card Member spending compared to the prior year.

Provisions for credit losses for the full year increased heavily to $2.2 billion, compared with a benefit of $1.4 billion a year ago. The change reflected a reserve build of $617 million, compared with a reserve release of $2.5 billion in the prior year.

Yet, credit metrics remained strong throughout the year and below pre-pandemic levels.

Consolidated expenses for the full year were $41.1 billion, up 24 percent from $33.1 billion a year ago, primarily reflecting higher customer engagement costs driven by higher network volumes and increased usage of travel-related benefits throughout the year.

Operating expenses also increased, primarily reflecting net losses of $302 million related to Amex Ventures investments in the current year compared with net gains of $767 million in the prior year, as well as higher compensation costs in the current year.

Fourth-Quarter 2022 Results

For the fourth quarter of 2022, the company reported net income of $1.6 billion (-6%), or $2.07 per share, compared with net income of $1.7 billion, or $2.18 per share, a year ago.

Fourth-quarter consolidated total revenues net of interest expense were $14.2 billion, up 17 percent from $12.1 billion a year ago. The increase was primarily driven by increased Card Member spending, as well as higher net interest income, reflecting higher average loan volumes.

Consolidated provisions for credit losses were $1.0 billion, compared with $53 million a year ago. The increase reflected a reserve build of $492 million, compared with a net reserve release of $168 million a year ago, as well as higher net write-offs in the current quarter.

Planned Dividend Increase

The company plans to increase the regular quarterly dividend on its common shares outstanding by 15 percent, from $0.52 to $0.60 per share, beginning with the first quarter 2023 dividend declaration.