(Reuters) – Credit card issuer American Express Co AXP.N reported a nearly 40% slump in quarterly profit on Friday, hurt by lower spending by its users, while it also set aside $665 million for potential defaults.
The COVID-19 pandemic has triggered the worst economic downturn in decades and led to mass layoffs, resulting in more people defaulting on their bills.
Net income fell to $1.07 billion, or $1.30 per share, for the third quarter ended Sept. 30, from $1.76 billion, or $2.08 per share, a year earlier.
Consolidated loss provisions in the quarter stood at $665 million, down 24% from $879 million a year earlier.
Total credit reserve levels at the end of the third quarter were generally consistent with second-quarter levels, the company said.
Total revenue, excluding interest expense, fell 20% to $8.8 billion.
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