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EARNINGS ROUNDUP

American Express profit drops 24%

October 21, 2008|The Associated Press

American Express Co. said its profit fell 24% in the third quarter as cardholders restrained their spending and had more trouble paying off debt.

But the results were better than anticipated and propelled Amex's shares more than 8% higher in after-hours trading.

Still, the company's report echoed recent results from JPMorgan Chase & Co., Citigroup Inc. and Capital One Financial Corp. showing that the credit-card environment is worsening -- even for companies such as American Express that cater to more well-heeled borrowers.

The New York-based credit-card issuer said net income was $815 million, or 70 cents a share, in the July-to-September quarter, down from $1.07 billion, or 90 cents, in the same period last year. Shares climbed $2.02, or 8.3%, to $26.37 after the markets closed. They rose $1.02, or 4.4%, to $24.35 during the regular session.

The card company took a $1.36-billion provision for loan losses, 51% higher than its provision in the third quarter last year. It saw its loan-loss rates nearly double to 5.9% from 3.0% a year ago on a managed basis, which includes card loans that are securitized.

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