AmEx profit misses estimates as it builds up reserves

(Reuters) – American Express Co (NYSE:)’s first-quarter profit missed Wall Street estimates on Thursday as the credit card giant set aside more money to cover potential losses stemming from cardholders falling behind on their debt repayments.

The growing economic uncertainty in the United States has slowly begun to catch-up with AmEx, which has so far been in a relatively better position compared to peers due to its wealthy customer base.

A persistently high inflation and a rapid rise in borrowing costs have begun to pinch customers, resulting in AmEx raising its provisions to $1.1 billion in the quarter compared with a benefit of $33 million a year ago.

Its profit fell 13% to $1.8 billion, or $2.40 per share, for the three months ended March 31, missing analysts’ average estimate of $2.66 per share, according to Refinitiv data.

Total revenue, excluding interest expense, rose 22% to $14.38 billion.

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