According to American Express, third quarter profits were lower than expected.
The credit card company reports a 20% drop in third quarter revenues to £6.72 billion.
American Express’ net profit for the third quarter was £820 million sterling.
The American Express Company (NYSE: AXP) announced on Friday that its third quarter profit was lower than expected. But revenues, it added, exceeded estimates. American Express estimated the provision for bad debts in the last quarter at £510.61 million compared with £674.93 million in the same period last year.
American Express stated that its net profit for the third quarter was printed at £820 million, or £1.0 per share. This compares with a much higher net profit of £1.35 billion or £1.60 per share for the same quarter last year. In the previous quarter (Q2), the New York-based company had reported a massive 85 percent drop in net profit.
American Express financial results for Q3 compared to analysts’ estimates
In terms of turnover, the credit card company recorded a 20% decline in the 3rd quarter to £6.72 billion. American Express attributed the decline to lower spending due to the coronavirus pandemic, which has so far infected more than 8.5 million people in the United States and caused over 225 thousand deaths.
According to FactSet, experts had predicted that the company would post revenues of £6.65 billion in the third financial quarter. Their estimate of earnings per share was capped at a higher value of £1.03 per share. Earlier this week, American Express announced that its virtual card payment option in partnership with Coupa Pay is now available worldwide.
Commenting on the news on Friday, American Express CEO Stephen Squeri said
“Since the lows in mid-April, we have seen a steady recovery in our overall spending volume. In fact, year after year we have seen positive growth in spending excluding travel and expenses, which have long been the largest part of our total spend.
American Express performance on the stock market
The company’s shares fell by approximately 4% in pre-market trading on Friday. After falling 1% at market opening, American Express now trades at £77.81 per share, a 45% recovery since March, when the stock hit its year-to-date low of £53 per share. Are you interested in investing in the stock market online? Here is a simple guide to help you get started.
American Express started the year with a share price of £96.63 per share. In 2019, the stock rose by almost 30%. At the time of writing this article, the American multinational financial services group has a market capitalization of £62.75 billion and a price-earnings ratio of 21.02.