AmEx profit plunges 85%
American Express ads used to say you can’t leave home without its cards, but now with people and their cards staying at home, customers spent a lot less. That helped drive down the credit card issuer’s quarterly profit by 85%.
And it wasn’t just consumers. Large companies cut spending on travel and entertainment, slamming AmEx, which is one of the largest corporate card issuers in the U.S.
In all, consumers and businesses cut spending on that category by 87% in the latest quarter.
As a result, AmEx’s top line fell 29%. That was deeper than analysts had expected.
The company also nearly doubled its loss provisions to $1.6 billion, building up its reserves in anticipation of a spike in defaults. JPMorgan Chase and Citigroup have created about $18 billion in provisions for potential credit losses.
