Chronicles Of Depression 2.0: #167

American Express Profit Falls on Higher Defaults (Update2)

July 21 (Bloomberg) — American Express Co., the biggest U.S. credit-card company by purchases, withdrew its 2008 earnings forecast after second-quarter profit fell 37 percent on worse-than-expected consumer defaults. The shares slumped 11 percent in extended trading.

Profit from continuing operations declined to $655 million, or 56 cents a share, from $1.04 billion, or 86 cents a year earlier, the company said today in a statement. The average estimate of 17 analysts surveyed by Bloomberg was 82 cents. American Express said it added $600 million before taxes to reserves for U.S. loan losses.

“By almost any measure, the U.S. economy and business environment are much weaker than the assumptions” the company had in January, Chief Executive Officer Kenneth Chenault said today in a conference call.

Emphasis added by me.

Well, hello there, reality! Thanks for smacking someone in the face! You think that sound will also be heard among the doubters reading this blog?

More:

Profit in the company’s U.S. card business dropped 96 percent to $21 million from $580 million a year earlier as provisions for losses more than doubled to $1.5 billion from $640 million. Uncollectible debt in the unit rose to 5.3 percent of loans from 2.9 percent a year earlier.

Emphasis added by me.

So, do you finally think it’s looking a bit grim out there?

Where’s your money today?

Educate yourself!

Explore posts in the same categories: C.O.A.T. - Money, Depression 2.0

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