American Express Co. (AXP) - Get Report posted stronger-than-expected first quarter earnings Friday thanks in a part to the release of loan loss reserves, but revenues fell amid a slowdown in consumer credit spending.
American Express said diluted earnings for the three months ending in March were pegged at $2.74, a near seven-fold increase from the same period last year and firmly ahead of the Street consensus forecast. The bottom line was supported by a $1.05 billion release of reserves that were previously set-aside to cover bad loans, American Express said.
Group revenues, American Express said, fell 912% to $9.06 billion, missing analysts' forecasts of $9.173 billion tally as consumer credit spending slowed in the wake of cash support from the Federal government's coronavirus stimulus bills.
“We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business," said CEO Stephen Squeri. "We’ve fired up our card acquisition engine, adding 2.1 million new proprietary cards during the quarter. Also, the additional value we provided on several of our premium products is helping to drive increased Card Member engagement, and our attrition rates and customer satisfaction levels remain better than pre-pandemic levels."
“Our investments to scale next horizon opportunities are well underway," he added. “Given the progress we’ve seen thus far and clear indicators that the economy is improving, I’m even more confident in our roadmap to achieve our aspiration of returning to the original EPS expectations we had for 2020 in 2022.”
American Express shares were marked 4.3% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $140.85 each.