American Express’ net income tanks about 85% in the second quarter

American Express Co. (NYSE: AXP) published its quarterly financial results on Friday that highlighted a stronger than expected profit. Its revenue, however, fell shy of the experts’ forecast in the second quarter that it attributed to a lower discount rate and a decline in spending from card members. In June, the People’s Bank of China approved a network clearing license for AmEx joint venture in China.

Shares of the company were reported 0.7% lower in premarket trading on Friday. At £75.42 per share, American Express is roughly 25% lower year to date in the stock market after recovering from an even lower £54 per share in March when the impact of COVID-19 was at its peak. Learn more about stocks and the stock market.

American Express’ Q2 financial results versus analysts’ estimates

The credit card company said that its net income in the second quarter came in at £201.50 million that translates to 22.74 pence per share. In the same quarter last year, American Express had reported a much higher £1.38 billion of net income or £1.62 per share. In a bid to digitise B2B payments, AmEx launched automated AP solution last week.

In terms of revenue, the New York-based company posted £6.02 billion that represents a 29% year over year decline in Q2. According to FactSet, experts had forecast the company to print £6.33 billion in revenue in the recent quarter. Their estimate for earnings per share (EPS), was capped at 6.27 pence.

Other prominent figures in American Express’ earnings report

American Express also highlighted in its earnings report on Friday that it generated £3.61 billion in revenue from its consumer services that marks a 23% decline on an annualised basis. Its merchant and network services, on the other hand, contributed £728.35 million to the company’s total revenue and came in 41% lower than the comparable quarter of last year. At £1.80 billion, its commercial services also registered a 30% decline versus the year-ago figure.

According to CEO Stephen Squeri of American Express:

“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.”

American Express performed fairly upbeat in the stock market last year with an annual gain of about 30%. At the time of writing, it has a market cap of £61 billion and a price to earnings ratio of 14.64.