American Express profit plunges 85% as coronavirus zaps spending
American Express profit plunges 85% as coronavirus zaps spending

By Jonathan Garber FOXBusiness

American Express profit plummeted 85 percent in the three months through June as customers slashed spending while holed up in their homes during COVID-19 lockdowns.

The New York-based financial services company earned $257 million, or 29 cents per share, as revenue fell 29 percent to $7.68 billion. Wall Street analysts surveyed by Refinitiv were expecting a loss of 11 cents per share on revenue of $8.15 billion.

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“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,” American Express CEO Stephen Squeri said in a statement. “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.”

AmEx set aside $1.6 billion for losses, up from $861 million a year ago, due to the uncertain macroeconomic outlook presented by COVID-19.

Consolidated expenses fell 29 percent from a year ago to $5.5 billion amid lower spending and a drop in usage of travel-related benefits.

Profit from the global consumer group fell 40 percent to $527 million while global commercial services lost $60 million after turning a profit of $561 million a year ago.

Meanwhile, profit at the global merchant and network services division fell to $66 million from $564 million last year.

American Express shares fell 22 percent this year through Thursday, trailing the S&P 500’s 0.15 percent gain.

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