New York's AmEx profits plunge 39% as travel spending comes to a standstill

On Friday, the New York-based credit card giant American Express had reported a stabbing 39 per cent plunge in quarterly profits over Q3, 2020

by Sourav D
New York's AmEx profits plunge 39% as travel spending comes to a standstill

On Friday, American Express Co., the New York City-headquartered 170-year-old financial services provider, widely known for its credit card business, had reported a staggering 39 per cent plunge in fourth-quarter profit, pointing towards a deepening of the pandemic outbreak’s fiscal fallouts as a lower expense on travel, entertainment alongside in-house dining had histrionically impacted the American multinational credit card giant’s quarterly earnings’ report.

On top of that, the New York City-based century-old company had told in its quarterly earnings’ report released on Friday that the American multinational credit card behemoth had earned $1.07 billion or $1.30 per share over its fiscal fourth quarter that ended on September 30, down from an earning of $1.76 billion or $2.08 a share registered at the same time a year earlier, while AmEx’s fourth-quarterly earnings had also missed an analysts’ estimate of an earning of $1.39 per share, data from Zacks Investment Research had unfolded.

AmEx Q4 profit bottoms as travel & dining spending comes to a standstill

If truth is to be told, American Express Co. had grappled with the pandemic-led fiscal downturns much better than its regional peers, a majority of which had been negatively impacted by credit defaults and delinquencies.

Nonetheless, an eye-watering 39 per cent plunge in AmEx’s fourth quarterly profit was largely catalysed by the clattering travel and tourism sector which had borne the heaviest brunt in the pandemic outbreak. Aside from that, analysts had also held AmEx’s business model responsible behind a perilous plunge at its Q4 profit, as many airlines had been grounded since the onset of the pandemic outbreak and people seemed to be more interested on home-deliveries rather than in-house dines, leading to a sharp decline in AmEx’s discount revenues to $4.99 billion over the fourth quarter of the year compared to a figure of $6.83 billion logged in the same period a year earlier.

Meanwhile, as the American multinational credit card mogul had reported a nearly 20 per cent plunge on average AmEx credit card spending to $4,486, American Express Co. Chief Executive, Stephen Squeri said in a statement late on Friday, “We recognize that the road ahead continues to be uncertain”.

Shares’ prices of Dow-listed American Express faltered as much as 3.81 per cent to $100.98 on Friday’s Wall Street round off.

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