AMEX profit down but not out
(28 January 2009 – US) American Express has announced its fourth quarter profit was down 79 percent compared to the same time in 2007, citing mounting loan defaults, write-offs and a decline in consumer spending as the main factors affecting its bottom line.
Net profit for the December quarter came in at US$172 million, falling from US$831 million the year before. Revenue dropped to US$6.5 billion, a decline of 11 percent relative to the last quarter of 2007.
American Express shares were firmer on the news with many analysts anticipating weaker results.
Amex chief executive and chairman, Kenneth I. Chenault, said that the operating environment was one of the most difficult in decades and that he remained cautious about the outlook for 2009.
Average spending by Amex card holders dived by 13 percent in the US and was down by 16 percent internationally.
Despite this, Chenault said that Amex had met its short term goals and had remained liquid and profitable.
Chenault added that the US$6.2 billion raised through retail certificates of deposit had exceeded the company’s funding requirements and that the US $3.4 billion cash injection for the US Government had further bolstered Amex’s capital position.
In October last year Amex announced plans to reduce costs by US$1.8 billion through a series of measures. This included cutting 7,000 jobs, tightening compensation and operational expenses, and clamping down on investment spending. Since November 2008, Amex has been operating as a bank holding company which has given it direct access to funding under the US Government’s Troubled Asset Relief Program.
American Express shares were firmer on the news with many analysts anticipating weaker results.
Amex chief executive and chairman, Kenneth I. Chenault, said that the operating environment was one of the most difficult in decades and that he remained cautious about the outlook for 2009.
Average spending by Amex card holders dived by 13 percent in the US and was down by 16 percent internationally.
Despite this, Chenault said that Amex had met its short term goals and had remained liquid and profitable.
Chenault added that the US$6.2 billion raised through retail certificates of deposit had exceeded the company’s funding requirements and that the US $3.4 billion cash injection for the US Government had further bolstered Amex’s capital position.
In October last year Amex announced plans to reduce costs by US$1.8 billion through a series of measures. This included cutting 7,000 jobs, tightening compensation and operational expenses, and clamping down on investment spending. Since November 2008, Amex has been operating as a bank holding company which has given it direct access to funding under the US Government’s Troubled Asset Relief Program.
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