Manhattan’s American Express profit beats estimate, says credit spending declines
by SOURAV D | VIEW 5654
On Friday, American Express Co., the Lower Manhattan, New York City-based American multinational financial services provider, had topped first-quarter profit estimates, though the payment processing giant had also added that travel and entertainment-related expenses on its cards had nearly halved over the first quarter as people stayed at home due to a stiffer pandemic restriction in major G20 economies, which in effect had eclipsed the credit card giant’s better-than-anticipated profits in latest quarter while leading to a decline in shares’ prices. In factuality, credit card issuers had also borne the heaviest brunt of pandemic’s fiscal fallouts, since a swathe of international travel bans due to an abrupt uptick in pandemic cases across the world had forced people alongside businesses to put a kibosh on travel-related spending, eventually inflicting deeper wounds into credit card issuers’ balance sheets during first three months of the year.
AmEx beats profit estimate, but travel & entertainment spending fall below 50%
In tandem, according to AmEx’s quarterly earnings’ report for its fiscal Q1, 2021, the credit card issuer had posted a six-fold surge at its net income to $2.2 billion as the payment processing giant had released more than $1 billion which it had set aside to cover up pandemic-related losses.
Besides, propelled by a non-tourism spending, AmEx reported an earning of $1.74 per share, above Wall St. estimates of $1.61 a share on an average, IBES data from Refinitiv had revealed. Meanwhile, citing that a likely continuation of international travel restrictions late into the year would add to hindrances in tourism and business travel expenses, American Express Co.
Chief Financial Officer (CFO) Jeffrey Campbell said in a post-earnings’ conference call with the reporters, “Our baseline assumption remains that by the fourth quarter of this year, global T&E (travel and entertainment) spending will be at around 70% of 2019 levels.
But travel for large and global corporations is going to rebound slower”. Shares’ prices of NYSE-listed AmEx tumbled nearly 2 per cent to $144.33 apiece on Friday after taking a header of as much as 3.5 per cent in pre-market trading.