Takeaways
- American Express increased its provisions for credit card defaults and its shares fell.
- The company posted record third-quarter revenue and earnings per share, cardholders having spent more on travel and entertainment.
- American Express reiterated the full-year sales and profit guidance it gave in early 2023.
American Express (AXP) was the worst performing stock on the Dow Jones in early trading Friday, with shares falling more than 4% after the credit card provider increased the money it sets aside to cover for defaulting customers.
Amex declared provisions for credit losses for The third quarter of fiscal 2023 was $1.233 billion, compared to $1.198 billion in the previous quarter and $778 million a year ago. The company explained that the increase reflected “higher net write-offs, partially offset by lower net reserve formation.” »
This happened while Amex reported its sixth consecutive quarter of record revenue, which increased 13% year-over-year to $15.38 billion. Earnings per share (EPS) came in at $3.30, also a record high. Both exceeded analysts' forecasts.
CEO Stephen Squeri credited the strong results to his cardholders' “robust spending” on travel and entertainment, which increased 13% on a currency-adjusted basis.
Squeri added that the company expects it will achieve revenue and EPS growth in 2023 in line with forecasts given at the start of the year.
The news sent shares of American Express in negative territory for 2023.
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Source: investopedia.com