Find the best credit card offers online.New York based financial giant American Express Company reported a third quarter net income fall of 21% which translates to $640 million or 53 cents per share. Previous figures were at $825 million or 70 cents per share. Revenue also fell to 16% which translates to $6.02 billion. According to American Express, these figures are much better than what they actually expected and the company feels confident that the end of the recession may finally be in sight.
American Express is often taken as a measure of the spending patterns of affluent consumers and corporations and their expression of confidence over the recession is surprising considering that defaults and credit card payment delinquencies are still at very high levels.
Ahead of the surprisingly positive comments made by American Express regarding the recent trends, AmEx shares jumped $1.34 each or 3.8% to $3.64 at 4 p.m. Trading. After hours, their stock fell by 22 cents.
Chief Executive of the company, Kenneth Chenault said. “While there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality, the trends in card member spending are encouraging and there are signs that the recession may be approaching an end”. Chenault also said that the increase in corporate spending can be taken as another positive sign of economic recovery.
American Express’ optimistic outlook is not shared by other credit card companies, however. Most have expressed doubt if the early signs of recovery may actually translate to actual trends at the moment. Major bank and credit card issuer Capital One Financial Corp. for instance was less than optimistic in their reports, even as the company’s earnings exceeded expectations and their shares increased to 7.6% during trading after-hours.
Even with American Express’s positive outlook and its better than expected earning figures, the company’s credit card default rates are still way above the rates it saw last year. During the third quarter of this year, American Express wrote of 8.9% of credit card loans in its U.S. market. Last year, during the same period, the company’s write offs were at 5.9%. However, the current write off rate is lower by 10% than the figures during the April and June period.
Meanwhile, McClean VA financial services firm Capital One reported a third quarter profit rise of 14% translating to $425.6 million from $374.1 million from the preceding period this year. Per share, Capital One’s earnings dropped to $0.94 from $1. The company also wrote off 9.64% of their credit card loans, an increase of 6.13% from figures taken a year earlier.
