American Express Co (NYSE:AXP) (FRA:AEC1) missed third-quarter profit estimates on Friday, as its customers spent less during the coronavirus (COVID-19) fueled economic slowdown and it set aside money for potential payment defaults.
The earnings-miss sent the company’s stock down by 3.8% to $101 a share in pre-market trading.
The COVID-19 pandemic has triggered the worst economic downturn in decades and led to mass layoffs, resulting in more people defaulting on their bills and offering more evidence that the economic recovery from the COVID-19 recession was faltering.
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The credit card issuer said consolidated loss provisions in the 3Q ended September 30 stood at $665 million, down 24% year-over-year.
“While credit remains strong, with delinquencies and net write-offs at the lowest levels we have seen in a few years, we remain cautious about the direction of the pandemic and its impacts on the economy, which is reflected in our reserve levels,” said CEO Stephen Squeri.
The company reported a nearly 40% slump in profit to $1.07 billion, or $1.30 per share, missing analysts’ average estimates of $1.35 per share.
American Express said total revenue, excluding interest expense, fell 20% to $8.8 billion.
Net income from the global consumer services unit – which primarily issues a wide range of proprietary consumer cards globally – was down about 14% at $855 million, reflecting a decline in spending and lower loan volumes.