AmEx profits up 3%, but still sets cash aside for downturn

Oct 21, 2022, 4:41 AM | Updated: 8:28 am

NEW YORK (AP) — American Express profits rose a modest 3% in the third quarter despite a significant rise in spending by cardmembers.

Revenue surged 24% to $13.56 billion, but profit its being curbed as the credit card giant sets aside hundreds of millions of dollars to cover potential credit losses in a volatile global economy.

Shares slumped 6.5% in morning trading Friday.

The New York company earned $1.88 billion, or $2.47 a share, or a nickel better than Wall Street had expected, according to a survey by Zacks Investment Research. It’s also up from the $1.83 billion, or $2.27 a share, in the same period a year earlier.

Despite double-digit increases in cardmember spending, new accounts opened, and healthy revenue, AmEx set aside $778 million to cover potential loan losses this quarter. That’s nearly double what larger banks like Citigroup, Wells Fargo and Bank of America reported putting in reserve when they reported quarterly results last week.

The company said the reason for the higher reserves was higher levels of loans provided by the company. AmEx has been moving to a more traditional business model encouraging card users to keep a balance — as well as the fact that even its well-to-do customers are getting hit by inflation. Total loans were $103.9 billion, up from $79.4 billion in the same period a year earlier.

“We have not seen changes in the spending behaviors of our customers, but we are mindful of the mixed signals in the broader economy and have plans in place to pivot should the operating environment change dramatically,” said CEO and Chairman Steve Squeri in a prepared statement.

AmEx told investors the company expects to have higher loan losses and charge-offs in the coming quarters, but says it will remain below pre-pandemic levels.

Setting aside the cloudy economic forecast, AmEx’s cardmembers are having no problem spending on their cards. The company saw $394.4 million spent on its network last quarter, up 19% from a year earlier. Average cardmember spending was up 13% from a year earlier to $5,886.

The company now expects full-year earnings to be above its previous forecast of $9.25 to $9.65 per share.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Jorge Carballo, one of the top administrators at the Rehabilitation Center at Hollywood Hills, is s...
Associated Press

Hurricane deaths at nursing home: accident or manslaughter?

FORT LAUDERDALE, Fla (AP) — A Florida nursing home administrator charged with causing the overheating deaths of nine patients after Hurricane Irma in 2017 went on trial Monday, with a prosecutor calling him a “captain who abandoned ship” while his attorney said he’s a “scapegoat” for failures of the electric company to restore power. Prosecutor […]
13 hours ago
FILE - This Oct. 3, 2012 file photo shows the Jim Beam visitors center at its central distillery in...
Associated Press

Kentucky Bourbon Trail attendance reaches record heights

FRANKFORT, Ky. (AP) — Bourbon tourism reached new heights last year in Kentucky, where visitors flocked to large and small distilleries as the whiskey-making attractions shook off any pandemic-era hangover. Attendance at distilleries along the Kentucky Bourbon Trail surpassed 2 million in 2022 for the first time ever, the Kentucky Distillers’ Association announced. Venerable bourbon […]
13 hours ago
Associated Press

AMC to charge more for good seats in movie theaters

NEW YORK (AP) — Middle seats at many U.S. movie theaters just got more expensive. AMC Theaters, the nation’s largest movie theater chain, on Monday unveiled a new pricing scheme in which seat location determines how much your movie ticket costs. Seats in the middle of the auditorium will cost a dollar or two more, […]
13 hours ago
Associated Press

Legal sizes for lobsters could change to protect population

PORTLAND, Maine (AP) — The rules about the minimum and maximum sizes of lobsters that can be trapped off New England could soon become stricter, potentially bringing big changes to one of the most valuable seafood industries in the country. Fishers are required to measure lobsters from eyes to tail and must throw back the […]
13 hours ago
FILE - Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif. on Oct. ...
Associated Press

Meta to buy VR startup Within after favorable court ruling

A federal judge has sided with Facebook parent Meta and cleared the way for the company to buy virtual reality startup Within Unlimited, the maker of the popular fitness app Supernatural. Federal antitrust regulators had sought to block the acquisition on the grounds that it would hurt competition in the emerging virtual reality market. But […]
13 hours ago
Associated Press

Russia’s revenue falls sharply in January from year earlier

MOSCOW (AP) — Russia’s finance ministry said Monday that budget revenue in January was 35% lower compared with the same month in 2022, the last month before Russia sent troops into Ukraine. The ministry also said the budget deficit for January was 1.77 trillion rubles ($23.9 billion), about 60% of the shortfall that had been […]
13 hours ago

Sponsored Articles

(Pexels Photo)...

Sports gambling can be fun for adults, but it’s a dangerous game for children

While adults may find that sports gambling is a way to enhance the experience with more than just fandom on the line, it can be a dangerous proposition if children get involved in the activity.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
AmEx profits up 3%, but still sets cash aside for downturn