(Reuters) - Credit card issuer American Express Co (N:AXP) posted a 76% drop in quarterly profit on Friday, as it set aside $1.7 billion to brace itself against potential non-payments due to a wave of coronavirus-led layoffs.
The pandemic has hammered the global economy, hurting consumers' ability to make payments on their credit cards. The lockdowns around the world are also hitting transaction volume as people stay at home.
"In light of the current environment, we are aggressively reducing costs across the enterprise", said Chief Executive Officer Stephen Squeri, adding that the deterioration in the economy due to the virus accelerated in April and has dramatically impacted its volumes.
However, shares of the company were up nearly 2%, as it kept a tight lid on costs to weather the impact of the pandemic on its business.
Total expenses were down 5% at $7.2 billion, due to lower operating expenses in the reported quarter. AmEx spent $2.39 billion on card member rewards, down 2% from a year earlier.
The company's net income fell to $367 million, or 41 cents per share, in the quarter ended March 31 from $1.55 billion, or $1.80 per share, a year earlier.
Consolidated provisions for losses rose to $2.6 billion from $809 million in the year-ago period.
Total revenue, excluding interest expense, fell to $10.3 billion from $10.4 billion.