“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 different economic environment and the diversity of our business model.”
That’s a quote from Ken Chenault, chairman and CEO of American Express. And it is true the company just reported net income of $437 million for the first quarter (versus $991 million a year ago). But its bread-and-butter credit card business in the U.S. performed very poorly. That business accounts for 52% of AMEX’s sales. It posted a loss of $25 million and increased by 57% its loss provision (up to $1.4 billion from $502 million a year ago). The international card business (responsibly for 17% of sales) did have a $39 milloin profit. It also sees more problems ahead – it increased loss provisions to $335 million from $106 million a year ago. All in the all, the B2B business made money but was down 14% – from $374 million of net last year to $323 million in this quarter. The consumer business made $14 million versus $656 million a year ago – a 98% drop.
Not the kind of stuff one would use the words “solidly profitable” to describe.