American Express Co. (AXP) - Get Report posted weaker-than-expected third quarter earnings Friday, but noted a steady recovery in current spending volumes as businesses reopen from pandemic lockdowns in key markets around the world.
American Express said earnings for the three months ending in September were pegged at $1.30 per share, down 17.1% from the same period last year and 5 cents shy of the Street consensus forecast. Group revenues, American Express said, fell 20% to $8.8 billion, topping analysts' estimates of an $8.6 billion tally.
The credit card group said its credit reserves, which include cash its sets aside to cover potential defaults, grew by $665 million, taking the end of quarter total to around $7.2 billion.
“While our business continues to be significantly affected by the impacts of the pandemic, our third quarter results have increased our confidence that our strategy for managing through the current environment is the right one,” said CEO Stephen Squeri. “Since the lows of mid-April, we have seen a steady recovery in our overall spending volumes. In fact, we had positive year-over-year growth in non-T&E spending, which has long accounted for the large majority of our overall volumes."
"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," he added.
American Express shares were marked 2.8% lower in early trading following the earnings release to change hands at $101.92, a move that trims the stock's six-month gain to around 9.5%.