Credit Card Companies Benefitting From Increased Consumer Spending in September
Five Star Equities Provides Stock Research on American Express and Discover Financial Services
NEW YORK, NY -- (Marketwire) -- 11/06/12 -- In the face of a slowing global economy credit card stocks have impressed investors with strong gains. Major companies such as Visa and MasterCard have surged recently after reporting financials that have topped analysts' estimates. Five Star Equities examines the outlook for companies in the Credit Services Industry and provides equity research on American Express Company (NYSE: AXP) and Discover Financial Services (NYSE: DFS).
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Companies' profits were boosted by strong consumer spending in the U.S., which rose more than forecasted last month. Consumer spending in the U.S. saw its largest gain in six months with a 0.8 percent increase in September, while income rose 0.4 percent. According to Bloomberg economists had predicted a gain of 0.6 percent.
"In the U.S., we saw an improvement in consumer confidence, which resulted in an increase in consumer-spending growth, although that growth is slower than 2011 or the numbers we saw in the first half of 2012," MasterCard's CEO, Ajay Banga, said in a conference call. "Housing-related categories of retail spending continue to perform well, which I think points to the underlying improvement in the housing market."
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American Express reported for the third quarter of 2012 credit card spending in the U.S. increased 8 percent from a year ago, while spending increased 6 percent globally. "We generated solid results this quarter against the backdrop of a very uneven global economy," said Kenneth I. Chenault, chairman and CEO. American Express and Wal-Mart have recently launched a card-based account service.
Discover Financial Services is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. For the third quarter of 2012 the company reported credit card loans grew 4 percent to $48.1 billion when compared to the year-ago quarter. The company in September was ordered by the Federal Deposit Insurance Corp. to pay $200 million to cardholders who were improperly sold credit protection.
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