AmEx profits fall as higher spending offset by loan losses
American Express said its first-quarter profits fell by 13% from a year ago, despite record revenue in the quarter, as the credit card company had to set aside more than $1 billion for potentially bad loans
NEW YORK (AP) — American Express said its first-quarter profits fell by 13% from a year ago despite record quarterly revenue as the credit card company had to set aside more than $1 billion for potentially bad loans.
The noticeable increase in loan loss reserves reflect the uncertain direction of where the economy is heading for many of the banks. AmEx's biggest credit card competitors also set aside money to cover potentially bad loans and have talked about how consumers are now carrying higher balances and aren't paying off their cards.
The credit card giant earned a profit of $1.82 billion, or $2.40 a share. That's down from $2.1 billion, or $2.73 a share, a year earlier. The results missed analysts' forecasts of around $2.60 a share, according to FactSet.
If AmEx hadn't set aside money for loan losses, this would have been a blockbuster quarter for the company. The New York firm grew revenues by 22% from a year ago, and total network volumes — the amount of money spent on American Express' proprietary network — was up 14%. The company also added 3.4 million new accounts in the quarter.
