American Express saw its fourth-quarter profits fall by 9%, as the credit card giant had to set aside significantly more money to cover potentially bad loans.
The company saw charge offs and delinquencies rise, a troubling sign for a company whose customer base is usually well-to-do and extremely creditworthy.
The New York-based company said it earned a profit of $1.57 billion in the quarter, or $2.07 a share, that is down from $1.72 billion, or $2.18 a share, in the same period a year earlier. That is below what analysts had forecasted. The company set aside $1.03 billion to cover potential credit losses, compared to only $53 million in the same period a year earlier. The company wrote off 1.3% of its total loans, compared to only 0.8% a year earlier. The number of card members who were 30 days or more past due also rose.
Over the past several years, AmEx has moved its traditional charge card business model — where a customer must pay off their entire balance each month — to a model closer in line with traditional credit card companies that encourage customers to keep a balance and the company collects interest off of that balance. Worldwide cardmember loans were $108 billion last quarter, up 22% from 2021.
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