American Express profits fell 9% in the fourth quarter of 2022, an ominous sign for a company characterized by a wealthy and creditworthy customer base, which has lately increased card cancellations and slipped into late payments, it said. PA.
Earnings were below analysts’ forecast. The company reported that it made a profit of $1.570 million dollars in the quarter, or $2.07 dollars per share, which is lower than the $1.720 million dollars, or $2.18 dollars per share, that the financial institution obtained in the same period of the previous year. .
The quarterly report indicates that American Express experienced a double-digit increase in card usage over the prior year, with cardholders spending $413.3 billion on their cards last quarter.
However, the increase in revenue was affected by a notable deterioration in the financial health of customers, which is why the company set aside $1.03 billion to cover potential credit losses, compared to just $53 million in the same period of the year. former.
American Express notes that it canceled 1.3% of its total loans, compared to just 0.8% a year earlier, plus there was an increase in the number of cardholders with late payments of 30 days or more.
However, Steve Squeri, chief executive of American Express, said that credit metrics “remained strong” in the quarter and that the company is seeing few signs of a recession in the short and medium term, so he considered that the spending of cardholders remains strong.
For his part, Jeff Campbell, AmEx’s chief financial officer, commented that they were already anticipating the increase in delinquency, but that they do not expect credit losses to reach pre-pandemic levels.
Executives at American Express were asked if the recent management layoffs are affecting the business, but executives responded that they were not, and that the increase in credit losses was mainly due to a post-pandemic normalization, when customers paid their bills. Credit cards.
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