- Financial services company American Express Company (NYSE:AXP) said today that it is going to reduce spending by about $3 billion this year
Financial services company American Express Company (NYSE:AXP) said today that it is going to reduce spending by about $3 billion this year, according to Reuters. This announcement was made during an earnings call where American Express revealed that its quarterly profit dropped 76%.
American Express is also putting money aside to prepare for a surge in potential delinquencies due to the COVID-19 pandemic.
“In light of the current environment, we are aggressively reducing costs across the enterprise,” said American Express Chief Executive Officer Stephen Squeri.
American Express is expecting operating expenses to fall about $1 billion year-over-year during the next three quarters. And American Express will dramatically reduce its marketing efforts.
And the net income for American Express dropped to $368 million (41 cents per share) from $1.55 billion ($1.80 per share). Total revenue (excluding interest expense) fell to $10.3 billion from $10.4 billion.
The spending by American Express cardholders during the first quarter dropped 3% in the U.S. and 11% overseas.
“T&E, which was roughly 30% of our proprietary volumes in 2019, is down almost 95%,” explained American Express Chief Financial Officer Jeffrey Campbell.
American Express’ total expenses in the quarter ended March 31 was down 5% at $7.2 billion due to a drop in operating expenses. And American Express spent $2.39 billion on rewards, down 2% a year earlier.
