American Express reports a 76% decline in profit in the first quarter

American Express (NYSE: AXP) released its quarterly earnings report on Friday that posted a massive 76% decline in profit in the first quarter. The credit card issuer also said that the Coronavirus pandemic is expected to fuel defaults for which it set aside £2.10 billion that marks an unprecedented 220% increase as compared to last year’s Q1.

Amex also said that it will allow merchants more time to settle payment disputes. Its card members, the company added, will also get financial assistance in the short and long-term. American Express was reported around 2% up in premarket trading on Friday.

American Express Reports Net Quarterly Income Of £297 Million

The health crisis has pushed the global economy into recession and forced the U.S business into cutting millions of jobs. The sharply rising unemployment in the U.S is expected to hit credit card companies including American Express as the financial challenges make it harder for people to repay their debts.

The flu-like virus has so far infected over 886,000 people in the U.S and has caused more than 50,000 death.

The credit card issuer reported its net income in the first quarter at £297 million that translates to 33 pence of earnings per share. In the same quarter last year, the American multinational financial services company had recorded a significantly higher £1.25 billion in net income or £1.46 of earnings per share.

Excluding interest expense, Amex printed its net revenue at £8.34 billion in the first quarter that came in slightly lower than the year-ago figure of £8.42 billion. Analysts had estimated the company to print £8.71 billion in revenue in Q1.

American Express Posted A Record High In February 2020

On an adjusted basis, however, American Express earned £1.60 per share that topped analysts’ forecast of £1.37 per share. In the second quarter, experts are anticipating the company to generate £8.41 billion in revenue and earn £1.36 per share.

At £67 per share, Amex is currently around 35% down year to date in the stock market. In comparison, the broader Dow Jones Industrial Average is down roughly 18%. The financial services company posted a record high of £111 per share earlier this year in February followed by a year to date low of £56 per share in late March.

In 2019, Amex noted an annual gain of around 30% in the stock market. At the time of writing, the company is valued at £53.77 billion and has a price to earnings ratio of 10.32.