Smartphone with Visa logo is seen in front of displayed stock graph in this illustration taken, July 15, 2021. REUTERS/Dado Ruvic/Illustration
Oct 20 (Reuters) – U.S. card companies are expected to benefit as pandemic-weary consumers continue to fuel demand for travel, one of the biggest contributors to revenue, despite rising inflation.
With more companies resuming business travel and people planning vacations, Visa Inc (), Mastercard () and American Express () are likely to see a jump in cross border volume, according to analysts.
“So far, despite the macro, you continue to see a somewhat stable consumer,” Wedbush Securities analyst Moshe Katri said, adding that monthly data from Visa and Mastercard showed no hit to payments or cross-border volumes.
Register now for FREE unlimited access to Reuters.com Register
“Bottom line, the sky isn’t falling, at least yet.”
Cross border volumes are a measure of travel demand reflecting spending on cards outside the country they were issued.
Pent-up demand for travel, coupled with inflation, was making U.S. travelers spend 35% more in the fall this year compared with 2021, according to a report from travel insurance aggregator Squaremouth.com.
American Airlines (), United Airlines Holdings () and Delta Air Lines () have also forecast strong profits for the rest of the year, in a sign that travel demand was offsetting concerns about expensive air fares.
Reuters Graphics
THE CONTEXT
Card companies tend to make more money when prices surge as they typically charge a percentage of the dollar value of transactions.
But high inflation can weigh on consumer spending if it is accompanied by rising interest rates, like in the United States, that could tip the economy into recession.
A darkening economic outlook has not yet crimped spending by consumers who remain in good financial health, according to U.S. banking giants that reported earnings earlier this month. read more
American Express, which is more sensitive to interest rate increases as credit cards comprise a large part of the company’s business, remains well-positioned.
“AmEx’s (credit) loss rates have stayed firmly in check. Its core customers are likely to have higher incomes, who are expected to be less impacted by inflation,” BofA Securities analyst Mihir Bhatia said.
American Express will report its quarterly earnings on Friday, followed by Visa and Mastercard next week.
AmEx shares have dropped 12%, while Mastercard and Visa are down 17% and 14% this year, respectively.
Reuters Graphics
THE FUNDAMENTALS
WALL STREET SENTIMENT
** American Express – 15 of 28 brokerages rate the stock “buy” or higher, 11 “hold” and 2 “sell”; median PT $170 – Refinitiv data
** Visa – 36 of 40 brokerages rate the stock “buy” or higher and 4 “hold”; median PT $257
** Mastercard – 35 of 39 brokerages rate the stock “buy” or higher, 4 “hold” and 2 “sell”; median PT $405
Register now for FREE unlimited access to Reuters.com Register
Reporting by Niket Nishant in Bengaluru; Editing by Lananh Nguyen and Shounak Dasgupta
Our Standards: The Thomson Reuters Trust Principles.
Visa, Mastercard profits expected to jump as travel rebounds
- Advertisment - 
Recent Comments
on Iowa State starting RB Jirehl Brock among latest college football players charged in gambling probe
on The Rev. Al Sharpton to lead protest after Florida governor’s ban of African American studies course
on Sports World Hails ‘Superwoman’ Lindsey Vonn for Her Grand Comeback Despite Career-Changing Injury
on San Mateo County Community College District sues five companies over role in ‘pay to play’ scandal
on Saipan, placid island setting for Assange’s last battle, is briefly mobbed – and bemused by the fuss
on ‘Pokémon Scarlet’ and ‘Violet’ Fan Theories Suggest Legendary Time Travel, Alternate Dimension Plot
on Joe Manchin and Tommy Tuberville introduce bill on name, image and likeness rules for college sports
on Inside the Michael Jordan ‘Air’ movie, plus why NFL, others are buying into the sports film industry
on If you’re a frequent traveler, these wrap tops from Aday will revolutionize your on-the-go wardrobe
on How Does Jack Nicklaus Travel? Exploring the Private Jets Owned by the ‘Golden Bear’ Over the Years
on Hollywood Reporter: Tom Cruise negotiated with movie studios over AI before the actors strike began
on Ford Blue Cruise: US regulators investigate fatal crashes involving hands-free driving technology
on Dozens of boats cruise the Seine in a rehearsal for the Paris Olympics’ opening ceremony on July 26
on Devout athletes find strength in their faith. But practicing it and elite sports can pose hurdles
on Despite strong Lunar New Year holiday data, consumer spending in China isn’t roaring back just yet
on David and Victoria Beckham so ‘Charmed’ by Tom Cruise They Have His Photos on Display at Their Home
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on CBS Sports announces Matt Ryan will join NFL studio show. Longtime analysts Simms and Esiason depart
on Boston College vs. Army live stream, how to watch online, CBS Sports Network channel finder, odds
on Boise State vs. Air Force live stream, odds, channel, prediction, how to watch on CBS Sports Network
on Biden to tout bill’s prescription drug prices, energy provisions in pitch to Americans, aide says
on After UFC Fallout, Conor McGregor Offers a Valuable Piece of Advice to Free Agent Francis Ngannou
on 2024 Super Bowl: CBS Sports Network and CBS Sports HQ to combine for 115 hours of weeklong coverage
on ‘Best Intention’: Chris Kirk Has Absolute Trust in Jay Monahan and PGA Tour’s Widely Debated Model
on 2023 NFL All-Rookie Team: CBS Sports draft expert, former GM unveil league’s best first-year players
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CBS Sports announces Matt Ryan will join NFL studio show. Longtime analysts Simms and Esiason depart
on Carlos Sainz’s Soccer Fanboy Emerges as Spaniard Shares Defining Moment With This Real Madrid Legend
on Biden: ‘At this point I’m not’ planning to visit East Palestine, Ohio, after toxic train derailment
on ‘Best Intention’: Chris Kirk Has Absolute Trust in Jay Monahan and PGA Tour’s Widely Debated Model
on Ahead of big sports weekend, dispute with Disney leaves millions of cable subscribers in the dark
on A heavy wave of Russian missile attacks pounds areas across Ukraine, killing at least 4 civilians
on 2024 Super Bowl: CBS Sports Network and CBS Sports HQ to combine for 115 hours of weeklong coverage
on 2023 NFL All-Rookie Team: CBS Sports draft expert, former GM unveil league’s best first-year players
on Army vs. Coastal Carolina live stream, how to watch online, CBS Sports Network channel finder, odds
on AL Rookie of the Year Julio Rodriguez Spreads Joy and Sportsmanship to the Youth of Loma de Cabrera
on After UFC Fallout, Conor McGregor Offers a Valuable Piece of Advice to Free Agent Francis Ngannou
on Dubai International Airport sees 41.6 million passengers in first half of year, more than in 2019
on Devout athletes find strength in their faith. But practicing it and elite sports can pose hurdles
on Despite strong Lunar New Year holiday data, consumer spending in China isn’t roaring back just yet
on Dave Portnoy: Taylor Swift’s security should ‘drag Kim Kardashian to jail’ if she attends Eras Tour
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CBS Sports, Serie A announce new TV rights deal; Paramount+ to air over 400 Italian soccer matches
on Cam Newton’s Violent Public Incident Draws Hilarious Reaction From 3x All-Star: “Where Do I Sign Up
on Boston College vs. Army live stream, how to watch online, CBS Sports Network channel finder, odds
on Angel Reese Launches Foundation Dedicated To Empowering Women Through Sports & Financial Literacy
on A weaker dollar, skyrocketing prices and ‘record’ visitor numbers: Good luck in Europe this summer