American Express Posts Surprise Q2 Profit, But Revenues Plunge Amid Coroavirus Collapse in Consumer Spending

American Express set aside $628 million to cover what could be a wave of consumer defaults in the months ahead as millions of Americans remain out of work amid the ongoing coronavirus pandemic.

American Express Co..  (AXP) - Get Report posted an unexpected second quarter profit Friday, but saw revenues fall by nearly a third as consumer spending collapsed during the peak of the coronavirus pandemic.

American Express said earnings for the three months ending in June were pegged at 29 cents per share, down 86% from the same period last year but besting the Street consensus forecast of a loss of 11 cents per share . Group revenues, American Express said, fell 30% from last year to $7.675 billion and missed analysts' forecast of an $8.155 billion tally.

American Express also said it would set aside $628 million to cover what it expected to be a wave of consumer defaults in the months ahead, taking its overall loss provisions to around $1.6 billion. 

“While our second quarter results reflect the challenges of the current environment, we remain confident that our strategy for navigating this period of uncertainty is the right one,” said CEO Stephen Squeri. “Our customers continue to be engaged with our products and services; we have a productive and dedicated workforce; our capital and liquidity levels remain strong; and we continue to focus on those areas most critical to our long-term growth.

“Spending volumes, which declined to their lowest point this quarter in April, gradually improved in May and June, with small businesses being the most resilient," he added "We feel good about our efforts to support our customers as they navigate unexpected financial challenges during these unprecedented times."

American Express shares were marked 1.9% lower in early trading immediately following the earnings release to change hands at $94.88 each, a move that extends the stock's year-to-date decline to around 24%.