American Express Co’s AXP-N first-quarter profit missed Wall Street estimates as the credit card giant set aside more money to cover potential losses stemming from cardholders falling behind on debt repayments.
Shares fell nearly 1 per cent in premarket trading as AmEx raised its provisions to $1.1-billion in the quarter compared with a benefit of $33-million a year ago.
Stubborn inflation and a rapid rise in borrowing costs have begun to pinch customers of AmEx, which has so far been in a better position than its peers due to a wealthy customer base.
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“We’re mindful of the mixed signals in the external environment,” Chief Executive Stephen Squeri said.
AmEx profit fell 13 per cent to $1.8-billion, or $2.40 per share, for the three months ended March 31, missing analysts’ average estimate of $2.66 per share, according to Refinitiv data.
The company, however, reaffirmed its profit forecast for 2023. It expects to earn $11 to $11.40 per share compared to analysts’ estimate of $11.10.
“In the US, spending was solid both by consumers and small businesses. Our customers are showing resilience even in this uncertain environment that we’re all operating in,” finance chief Jeff Campbell told Reuters adding that he was not seeing any signs of a recession yet.
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Total revenue, excluding interest expense, rose 22 per cent to $14.38-billion in the first quarter.