American Express says profit was lower than expected in the fiscal third quarter

The American Express Company (NYSE: AXP) said on Friday that its profit in the fiscal third quarter came in lower than expected. But revenue, it added, topped estimates. American Express valued provisions for bad loans in the recent quarter at £510.61 million versus the year-ago figure of £674.93 million.

American Express said that its net income in the third quarter printed at £820 million that translates to £1.0 per share. In comparison, it had reported a much higher £1.35 billion of net income in the comparable quarter of last year, or £1.60 per share. In the prior quarter (Q2), the New York-based company had revealed a massive 85% decline in net income.

American Express Q3 financial results versus analysts’ estimates

In terms of revenue, the credit card company posted a 20% decline in Q3 to £6.72 billion. American Express attributed the decline to lower spending due to the Coronavirus pandemic that has so far infected more than 8.5 million people in the United States and caused over 225 thousand deaths.

According to FactSet, experts had forecast the company to record £6.65 billion of revenue in the fiscal third quarter. Their estimate for per-share earnings was capped at a higher £1.03 per share. Earlier this week, American Express announced that its virtual card payment option in collaboration with Coupa Pay was now available globally.

CEO Stephen Squeri of American Express commented on the news on Friday and said:

“Since the lows of mid-April, we have seen a steady recovery in our overall spending volumes. In fact, we had positive year over year growth in non-travel-and-expense spending, which has long accounted for the large majority of our overall volumes.”

American Express performance in the stock market

Shares of the company were reported about 4% down in premarket trading on Friday. After jumping back 1% on market open, American Express is now trading at £77.81 per share that represents a 45% recovery since March when the stock had touched a year to date low of £53 per share. Interesting in investing in the stock market online? Here’s a simple guide to get you started.

American Express had started the year at a per-share price of £96.63. In 2019, the stock gained close to 30%. At the time of writing, the American multinational financial services corporation has a market cap of £62.75 billion and a price to earnings ratio of 21.02.