The US financial group American Express is arming itself with high provisions for loan defaults – which weighs on the balance sheet. In the first quarter, profit fell 13 percent year-on-year to $1.8 billion, the credit card giant announced. However, day-to-day business went well: Revenue rose 22 percent to $14.3 billion. The payment volume also increased sharply. The Visa rival also confirmed its profit targets for the year.
Nevertheless, the share initially fell by a good one percent before the market. Given the uncertain economic outlook, American Express increased loan loss provisions to $1.1 billion. In the prior-year period, the company released provisions of $33 million.
Unlike its biggest competitors Visa and Mastercard, American Express not only processes card payments, but also grants the actual loans and therefore has to protect itself against payment defaults.
