Due to customers falling behind on payments, American’s Express Q4 fell by 9%

As the credit company had to keep aside far more money to cover bad loans, American Express’s fourth-quarter profits dropped by 9%. However, the business planned to raise its quarterly profit and forecast a higher profit for 2023.

As per the New York-based corporation, it earned USD 1.587 billion quarterly, or USD 2.07 billion per share, which is lower as compared to a year ago, when it was USD 1.72 billion, or USD 2.18 per share. This is below what the expert had anticipated.

Also, AmEx kept aside USD 1.03 billion to cover the bad loans, which were USD 53 million a year earlier.

Steve Squeri, the AmEx CEO, said that the company’s credit metrics were good throughout the quarter.

Over the past years, the company has changed the old charge card business model where customers needed to pay off the full and final balance each month to one where customers could keep a balance and the company would charge interest on that balance.

On a call with investors, Steve Squeri told the analyst that the company is observing some kind of recession in the short to medium term; however, cardmembers’ spending is still quite high. Cardmember loans were 108 billion in the recent quarter, a 22% increase from 2021.

The company expected a full-year profit for 2023 between USD 11.00 and USD 11.40 per share. Also, its quarterly dividend was raised from 52 cents per share to 60 cents per share.