Card industry sees mixed trends in 2024 amid macro instability

Discover Financial Services

31/12/2024 17:47

** Card company stocks remained mixed in 2024 as high
borrowing costs prompted a large section of customers to cut
back on spending, while the affluent continued to make purchases
    ** The Federal Reserve's stance on hiking rates to a record
high level to battle inflation did not help U.S. payments
industry as lower-income Americans struggled with purchases
    ** However, hopes for a soft economic landing and rate cuts
towards the end of the year helped Visa  V.N  and Mastercard
 MA.N  recoup some losses
    ** Visa CFO Chris Suh told Reuters in October that he
expects consumer resilience to extend into 2025
    ** Visa's shares gained a little over 21% in 2024, while
Mastercard rose 23%, compared to a 25.2% rise in the benchmark
S&P 500 index  .SPX  
    ** "We are bullish on Mastercard's ability to accelerate the
shift away from roughly $11 trillion of global cash," analysts
at William Blair wrote in a note earlier in the year
    ** Shares of American Express  AXP.N  surged nearly 59% YTD,
outperforming rivals in 2024
    ** AXP's affluent customer base helped the company maintain
smaller provisions for credit losses than its peers who cater to
a broader spectrum of customers
    ** Several analysts lauded expense management at the
company, which CFO Christophe Le Caillec labeled as
'disciplined', post their third-quarter results
    ** Consumer bank Capital One  COF.N  said earlier in the
year it will acquire credit card issuer Discover Financial
 DFS.N  in an all-stock transaction valued at $35.3 billion to
create a global payments giant, in what is set to reshape the
payments industry 
    ** DFS gained over 53% in 2024
    ** Visa and Mastercard have faced heightened scrutiny from
regulators and lawmakers for years, battling allegations of a
duopoly

 (Reporting by Pritam Biswas in Bengaluru)
 ((Pritam.Biswas@thomsonreuters.com))