American Express Suffers Steep Profit Drop

Credit card giant American Express has reported a $337 million profit in its second quarter, which marks a 48 percent decrease in profits from the same time last year, when the company earned $660 million in profits. American Express has blamed its relative underperformance on its move to pay off some of the money that it received from the government bailout.
 
According to American Express, the company’s profits, excluding the costs involved in paying back at least some of the money the company received as part of the TARP program, are actually three times higher than what they reported. Analyst predictions, which also excluded bailout costs, expected American Express to do slightly worse than it did.
 
Despite this, the company’s shares fell 4 percent after posting its report. Credit card companies have struggled throughout the recession as rising unemployment leads to less spending among its customers. Total spending of American Express customers has fallen 15 percent since last year, decreasing from $3.2 billion to $2.7 billion.

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