American Express profits lower in Q1

On the same day President Barack Obama met with credit card company executives to discuss possibly abusive practices within the credit card industry, American Express (AXP) reported first quarter profits of $443 million, 58 percent lower than a year ago. Despite the drop, the company's credit card practices have allowed it to remain profitable in one of the most difficult economic environments in memory.

The company's earnings per share from continuing operations came in at 32 cents, down 64 percent from 89 cents per share a year ago. Total revenues dropped 18 percent, from $7.2 billion last year to $5.9 billion in the first quarter, reflecting increasing bad loans and reduced credit spending due to the slumping economy.

"At a time when some parts of the card industry were incurring substantial losses, we remained solidly profitable thanks, in part, to our flexibility in adapting to a very difficult economic environment and the diversity of our business model," said Kenneth Chenault, Amex chairman and CEO.

The company's U.S. Card Services unit reported a first quarter loss of $25 million the company said, due to reduced card-member spending and lower securitization income. Those losses were offset by gains in the company's International Card services unit, which reported profits of $39 million, lower than the $133 million a year ago, and its Global Commercial Services unit, which saw a profit of $86 million in the first quarter, down from the $151 million recorded during the same period last year. The Global Network & Merchant Services unit recorded the bulk of the profits, taking in $237 million, up six percent over the $223 million from a year before. Corporate also saw a profit of $106 million, up from $14 million a year ago largely due to results from re-engineering initiatives.
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