topic Re: American Express reported an 85% slump in quarterly profit... in Credit in the News

American Express reported an 85% slump in quarterly profit...

Adkins — Sat, 25 Jul 2020 02:06:23 GMT

American Express reported an 85% slump in quarterly profit as spending using its card collapse

https://t.co/RQuhCDaFst https://t.co/leaEuXkLQX

"The compy said its high exposure to travel and entertainment (T&E) industries, which have been ravaged by the COVID-19 pandemic, has led to a sharp decline in its overall spending volumes, though some other sectors are looking up."

Re: American Express reported an 85% slump in quarterly profit...

Brian_Earl_Spilner — Sat, 25 Jul 2020 02:57:43 GMT

And yet, they tighten up on apps and limit increases.

Re: American Express reported an 85% slump in quarterly profit...

M_Smart007 — Sat, 25 Jul 2020 03:02:42 GMT

Thanks for posting the article @Adkins !

Re: American Express reported an 85% slump in quarterly profit...

Revelate — Sat, 25 Jul 2020 17:14:18 GMT

@Brian_Earl_Spilner wrote:
And yet, they tighten up on apps and limit increases.

Wouldn't you?

SUBs cost money and if your customer base ain't spending like they used to... who, rationally, is the person applying for your card?

Not likely someone ideal from a lender standpoint.

I don't think anyone knows what the market is going to look like, the longer COVID goes on the longer it has the chance to make real changes in behavior. It's possible there is a drunken fiesta of a spending spree by the mythical average consumer when this lifts one way or another... but it might not either and then where is Amex? There is more and more signs that business travel isn't going to come back like it was, and might not ever: less office spaces in use to go to, and more and more companies are finding remote work is just fine.

My own big giant company apparently accelerated plans that were clearly in the works and closed a bunch of offices down, they aren't likely ever coming back though in our case there are other structural reasons for this, but I would note we used Concur aka Amex Travel and that revenue is gone for Amex right now.

Out of all the credit card issuers in this world, I would not want to be Amex right now. Out of the majors Synchrony and Cap 1 were probably the two largest risks for default, but Amex is the biggest risk to never regain their former stature or revenue imo.

Re: American Express reported an 85% slump in quarterly profit...

Remedios — Sat, 25 Jul 2020 16:48:43 GMT

Also, compared to Chase, Amex really isnt even trying to encourage use of their cards.

Chase has stepped up with their offers on CSP/CSR enough to where I'm using them more now than when traveling.

On Delta Reserve, groceries only...right along 55 other cards.

I have no plans to cancel it, but I sorely lack motivation to pay with it.

Re: American Express reported an 85% slump in quarterly profit...

Anonymous — Sat, 25 Jul 2020 17:51:32 GMT

@Remedios wrote:
Also, compared to Chase, Amex really isnt even trying to encourage use of their cards.
Chase has stepped up with their offers on CSP/CSR enough to where I'm using them more now than when traveling.
On Delta Reserve, groceries only...right along 55 other cards.
I have no plans to cancel it, but I sorely lack motivation to pay with it.

Being fair to American Express they are a credit card company that focuses on travel where as JP Morgan Chase & Co is the largest bank in the United States and has a lot more income sources than credit cards. Chase can afford to take massive losses on credit cards if it means customer acquistion where as Amex can not. They took losses for years on the CSR before bumping up it's annual fee just because they wanted to aquire more customers. Once they got a ton of people locked into the "Chase ecosystem" they than raised the annual fee up on the CSR so the card would become profitable for them. Right now they are being smart trying to steal business from Amex and once they get more customers doing so and things in the economy start to stabilize the benefits on these cards will either get slashed and/or the annual fees will be raised.

Re: American Express reported an 85% slump in quarterly profit...

Remedios — Sat, 25 Jul 2020 18:13:54 GMT

The offers I'm talking about are on Chase travel cards.

Chase had more than 65% dip in April, but recovered nicely because they ensured travel cards get used for "everything else"

Amex is being Amex, and if they are waiting on economy to stabilize, I hope they are hydrating and sitting down. Might be a while.

I can totally see being fairly judicious with new applications, but existing cardholders require incentive.

If they dont provide it, cards go unused or closed. Then they get mad and do "pop up".

At this point, they should be giving me compelling reason to keep/use, not the other way around.

I still have money to spend, but I expect something in return. If I'm getting nothing, I might as well just withdraw $550.00 then burn it. Same thing.

Re: American Express reported an 85% slump in quarterly profit...

CreditCuriosity — Sat, 25 Jul 2020 18:26:24 GMT

I am an Amex stock holder and oh is the stock hurting and the stock I hold with them down close to 30% for the year... I haven't experienced any issues credit wise with amex as they flow easily for me w/regards to credit, but with that said Chase and other cards are getting alot more spend than amex right now.

I tend to agree at least in next year or two travel is going to be way down for businesses and office space is going ot be way down as we are getting rid of over half ours and I will be in office 1 or 2 days a week in the future at most vs. 3-4 days a week I use to do. This is even after post cv-19 as they found out we are just as productive if not more fully teleworking. I certainly would not want to be in commercial real elstate line of work right now as their business is going to plummet even after a vaccine or cure or whatever after cv-19 passes as companies simply realized due to this most people dont need to be in the office.

Re: American Express reported an 85% slump in quarterly profit...

Anonymous — Sat, 25 Jul 2020 18:26:38 GMT

@Remedios wrote:
The offers I'm talking about are on Chase travel cards.

Chase had more than 65% dip in April, but recovered nicely because they ensured travel cards get used for "everything else"

Amex is being Amex, and if they are waiting on economy to stabilize, I hope they are hydrating and sitting down. Might be a while.

I can totally see being fairly judicious with new applications, but existing cardholders require incentive.
If they dont provide it, cards go unused or closed. Then they get mad and do "pop up".
At this point, they should be giving me compelling reason to keep/use, not the other way around.
I still have money to spend, but I expect something in return. If I'm getting nothing, I might as well just withdraw $550.00 then burn it. Same thing.

Chase recovered nicely because they are the largest bank in the United States and are extremely profitable because of that. Credit cards are only a portion of the company not the entire company. Amex is a credit card company focused on travel that is why they have gotten hammered and will continue to be hammered until the economy stabilizes.

By all means use whatever credit card that makes the most sense for you...I think we all do that on these forums. All I'm saying is don't expect Chase to be as generous in the future as they are being right now. They are only being this generous trying to get customer acquisition once they get the new customers extra benefits go away and fees go back up.

Re: American Express reported an 85% slump in quarterly profit...

Brian_Earl_Spilner — Sun, 26 Jul 2020 15:19:46 GMT

@Revelate wrote:
@Brian_Earl_Spilner wrote:
And yet, they tighten up on apps and limit increases.
Wouldn't you?

SUBs cost money and if your customer base ain't spending like they used to... who, rationally, is the person applying for your card?

Not likely someone ideal from a lender standpoint.

I don't think anyone knows what the market is going to look like, the longer COVID goes on the longer it has the chance to make real changes in behavior. It's possible there is a drunken fiesta of a spending spree by the mythical average consumer when this lifts one way or another... but it might not either and then where is Amex? There is more and more signs that business travel isn't going to come back like it was, and might not ever: less office spaces in use to go to, and more and more companies are finding remote work is just fine.

My own big giant company apparently accelerated plans that were clearly in the works and closed a bunch of offices down, they aren't likely ever coming back though in our case there are other structural reasons for this, but I would note we used Concur aka Amex Travel and that revenue is gone for Amex right now.

Out of all the credit card issuers in this world, I would not want to be Amex right now. Out of the majors Synchrony and Cap 1 were probably the two largest risks for default, but Amex is the biggest risk to never regain their former stature or revenue imo.

No, I wouldn't.

I can understand being more critical of new apps from new people, but denying new cards to people with established relationships and outright getting rid of recon despite those histories is ridiculous. 😉 If I'm spending upwards of $3k a month, every month for the last 2 years, including during the pandemic, and paying in full, why are they gonna throttle my spending power? They're really gonna deny me new credit even though I've worked 15 years for an essential business that is posting better earnings than last year, and has stock heading for an all time high, forget the fact that business is so booming everyone is getting a raise (4% for myself)? Sure are, because I can't recon and tell them that. And even if I could, they're not hearing it because corporate sent out a memo saying, "no reconsiderations during the pandemic".

Then you have what @Remedios posted, they're not really trying to encourage spend. They're coming across as having this mentality of "well, our meat and potatoes is screwed because of this pandemic, we better just make sure we don't lose any more money" instead of trying to encourage spend to make up that lost revenue, or increasing spending power for those that can.

Then, there's your own statement. If business travel and spend isn't coming back soon, and possibly ever at the previous levels, and that's really the bulk of Amex's income, they should be evolving their products, even if temporarily, to ride out a possible year of this, or more. If they can't, that makes them a one-trick pony and who knows if they can really recover from it to previous levels.

Re: American Express reported an 85% slump in quarterly profit...

Brian_Earl_Spilner — Sun, 26 Jul 2020 15:25:29 GMT

@Remedios wrote:
The offers I'm talking about are on Chase travel cards.

Chase had more than 65% dip in April, but recovered nicely because they ensured travel cards get used for "everything else"

Amex is being Amex, and if they are waiting on economy to stabilize, I hope they are hydrating and sitting down. Might be a while.

I can totally see being fairly judicious with new applications, but existing cardholders require incentive.
If they dont provide it, cards go unused or closed. Then they get mad and do "pop up".
At this point, they should be giving me compelling reason to keep/use, not the other way around.
I still have money to spend, but I expect something in return. If I'm getting nothing, I might as well just withdraw $550.00 then burn it. Same thing.

If chase pre-approved me for the trifecta despite being 15/24, I'd jump ship in a heartbeat. I'm seriously tired of the leash.

Re: American Express reported an 85% slump in quarterly profit...

M_Smart007 — Sun, 26 Jul 2020 15:51:18 GMT

@CreditCuriosity wrote:
I am an Amex stock holder and oh is the stock hurting and the stock I hold with them down close to 30% for the year... I haven't experienced any issues credit wise with amex as they flow easily for me w/regards to credit, but with that said Chase and other cards are getting alot more spend than amex right now.

I tend to agree at least in next year or two travel is going to be way down for businesses and office space is going ot be way down as we are getting rid of over half ours and I will be in office 1 or 2 days a week in the future at most vs. 3-4 days a week I use to do. This is even after post cv-19 as they found out we are just as productive if not more fully teleworking. I certainly would not want to be in commercial real elstate line of work right now as their business is going to plummet even after a vaccine or cure or whatever after cv-19 passes as companies simply realized due to this most people dont need to be in the office.

@CreditCuriosity, I live in Silicon Valley, I cannot even imagine what the Retail office space sector will be like,

for years and years, I have seen tons of commercial buildings office space built. It sure is going to be interesting

to watch what happens. Maybe they can use 0.05% of it for the major homeless population.

Re: American Express reported an 85% slump in quarterly profit...

Remedios — Sun, 26 Jul 2020 16:39:55 GMT

@Anonymous wrote:
@Remedios wrote:
The offers I'm talking about are on Chase travel cards.

Chase had more than 65% dip in April, but recovered nicely because they ensured travel cards get used for "everything else"

Amex is being Amex, and if they are waiting on economy to stabilize, I hope they are hydrating and sitting down. Might be a while.

I can totally see being fairly judicious with new applications, but existing cardholders require incentive.
If they dont provide it, cards go unused or closed. Then they get mad and do "pop up".
At this point, they should be giving me compelling reason to keep/use, not the other way around.
I still have money to spend, but I expect something in return. If I'm getting nothing, I might as well just withdraw $550.00 then burn it. Same thing.

Chase recovered nicely because they are the largest bank in the United States and are extremely profitable because of that. Credit cards are only a portion of the company not the entire company. Amex is a credit card company focused on travel that is why they have gotten hammered and will continue to be hammered until the economy stabilizes.

By all means use whatever credit card that makes the most sense for you...I think we all do that on these forums. All I'm saying is don't expect Chase to be as generous in the future as they are being right now. They are only being this generous trying to get customer acquisition once they get the new customers extra benefits go away and fees go back up.

I'm not sure I understand your point here.

Yes, Chase is large, and after banking with them since forever, I dont expect them to be generous.

I dont expect any lender to be "generous", because it cuts into the profits, which is the antithesis of lending.

What they are doing now is not generosity, it's adaptability.

Chase is very travel heavy with their CC lineup. They can sit, twirl their thumbs and go with "We're big, we just gonna do other stuffs" but they dont, because they understand concept of jumping ship.

Last year AFs made sense, this year the onus is on lender to show card still has value, even if main purpose is lost at the moment.

In other words, if I was a travel agent, I'd either be looking for a second gig, or expand my repertoire to include services unrelated to travel, because travel is not happening. It's not a bold move to try weathering something you have no clue when it will end by waiting and watching, it's a stupid move that will leave them behind.

Re: American Express reported an 85% slump in quarterly profit...

Anonymous — Mon, 27 Jul 2020 07:46:03 GMT

@Brian_Earl_Spilner wrote:
@Remedios wrote:
The offers I'm talking about are on Chase travel cards.

Chase had more than 65% dip in April, but recovered nicely because they ensured travel cards get used for "everything else"

Amex is being Amex, and if they are waiting on economy to stabilize, I hope they are hydrating and sitting down. Might be a while.

I can totally see being fairly judicious with new applications, but existing cardholders require incentive.
If they dont provide it, cards go unused or closed. Then they get mad and do "pop up".
At this point, they should be giving me compelling reason to keep/use, not the other way around.
I still have money to spend, but I expect something in return. If I'm getting nothing, I might as well just withdraw $550.00 then burn it. Same thing.
If chase pre-approved me for the trifecta despite being 15/24, I'd jump ship in a heartbeat. I'm seriously tired of the leash.

That leash is irritating me too. I have good use for my Gold and BCP as always and use them to generate good rewards as a lot of my organic spend fits them, but my travel Amex cards get $20/month or so and that's it. Like you, I'm still throttled. I'm also running up to $2500/month through Amex and have evolved into a transactor with them, zeroes on every statement as that's always been the wisdom of what they like. Despite that and all the improvements I've made to my profile across the board, and I can't get dollar one of a CLI out of them (approaching two years also). I like the cards and they work for me, I use them a lot, but there's no love returned ever...

Re: American Express reported an 85% slump in quarterly profit...

iced — Sat, 01 Aug 2020 01:28:06 GMT

@Remedios wrote:
Also, compared to Chase, Amex really isnt even trying to encourage use of their cards.
Chase has stepped up with their offers on CSP/CSR enough to where I'm using them more now than when traveling.
On Delta Reserve, groceries only...right along 55 other cards.
I have no plans to cancel it, but I sorely lack motivation to pay with it.

Funny you say that, because Amex has thrown 3 offers at me in the last few months that actually got me to spend on their card. Chase is pushing some ok offers, but this quarter for me is lookingn like Amex wins the offer battle.

Re: American Express reported an 85% slump in quarterly profit...

iced — Sat, 01 Aug 2020 01:55:52 GMT

I'll just put it out there now, but I think everyone in the "woo, work from home is the future!" and "travel will never be the same again" camps need to be patient and not jump the gun too fast. Jury's still out on both.

Given this second wave of infections we're having, it's obvious that as soon as things open up, there's still a lot of people ready to get out there and travel and dine like it was 2019.

There's also cracks starting to show in the efficacy of working from home full time, and some employers are already having second thoughts about how well it really worked. A few companies will shift to full WFH, but don't hold your breath that in 3-5 years all the white collar workers will still be getting to chillax at home and do Zoom calls.

As for Amex, no complaints from me on their conservative approach and "leashing" of some customers. Playing it defensive is good optics for shareholders, and the drop in profit seems to justify the need to play it safe in the short term. I'm confident enough that I'm not going to sell my AXP shares, and I may pick up more if the right price presents itself.

Re: American Express reported an 85% slump in quarterly profit...

Revelate — Sat, 01 Aug 2020 12:28:42 GMT

@iced wrote:
I'll just put it out there now, but I think everyone in the "woo, work from home is the future!" and "travel will never be the same again" camps need to be patient and not jump the gun too fast. Jury's still out on both.

Given this second wave of infections we're having, it's obvious that as soon as things open up, there's still a lot of people ready to get out there and travel and dine like it was 2019.

There's also cracks starting to show in the efficacy of working from home full time, and some employers are already having second thoughts about how well it really worked. A few companies will shift to full WFH, but don't hold your breath that in 3-5 years all the white collar workers will still be getting to chillax at home and do Zoom calls.

What specifically?

Every place I work with / at, more and more hearing talk and even outright statements they won't renew their leases.

Not saying your wrong, there's always been some segment of the executive population that wants to be able to walk out of their corner offices and survey their domain, but I can't see where it goes back to the way it was.

My little niche was turning the corner pre-COVID on WFH, I don't think it's ever coming back as long as I am willing to get on an airplane when needed... someone still has to get the base infrastructure done, and while I'm an awfully expensive resource to be doing rack and stack especially in a remote location, that's fufilling my half of the deal.

Just disappointing, a paid week in San Diego would usually be excellent especially during the summer, but COVID, oh well haha. San Diego looks much the same as Houston at that point other than lower air conditioning costs. It is an opportunity to get back to LA and take care of my things there at least, been looking for a chance to do that.

Re: American Express reported an 85% slump in quarterly profit...

iced — Sat, 01 Aug 2020 12:28:30 GMT

@Revelate wrote:
@iced wrote:
I'll just put it out there now, but I think everyone in the "woo, work from home is the future!" and "travel will never be the same again" camps need to be patient and not jump the gun too fast. Jury's still out on both.

Given this second wave of infections we're having, it's obvious that as soon as things open up, there's still a lot of people ready to get out there and travel and dine like it was 2019.

There's also cracks starting to show in the efficacy of working from home full time, and some employers are already having second thoughts about how well it really worked. A few companies will shift to full WFH, but don't hold your breath that in 3-5 years all the white collar workers will still be getting to chillax at home and do Zoom calls.
What specifically?

Every place I work with / at, more and more hearing talk and even outright statements they won't renew their leases.

Not saying your wrong, there's always been some segment of the executive population that wants to be able to walk out of their corner offices and survey their domain, but I can't see where it goes back to the way it was.

For me specifically my little niche was turning the corner pre-COVID on WFH, I don't think it's ever coming back as long as I am willing to get on an airplane when needed... someone still has to get the base infrastructure done, and while I'm an awfully expensive resource to be doing rack and stack especially in a remote location, that's fufilling my half of the deal.

Just disappointing, a paid week in San Diego would usually be excellent especially during the summer, but COVID, oh well haha. San Diego looks much the same as Houston at that point other than lower air conditioning costs.

https://www.wsj.com/amp/articles/companies-start-to-think-remote-work-isnt-so-great-after-all-11595603397

Re: American Express reported an 85% slump in quarterly profit...

Revelate — Sat, 01 Aug 2020 12:37:54 GMT

"Projects are taking longer, collaboration is harder, and training new workers is a struggle. The Wall Street Journal says remote work isn’t going to be sustainable for much longer"

Oh my, with everyone WFH, the companies and their organizations need to adapt too? Say it isn't so!

I'll be the first to admit my "new hire orientation" would've been better in person and might have formed more lasting relationships with the people in that class (god I've gone so corporate) but it worked out OK... I didn't have any high expectations on that front to begin with honestly having been a contractor for 18 months in my role and knowing I will have very little overlap with nearly anyone going through it.

It's a new model that companies will have to adapt to and those who are thinking they can just keep doing things the ways they have always done are going to be tomorrow's dinosaurs anyway. I didn't find the full article but from the part I could read, color me skeptical that it is the only way it's going to happen.

Even if only 5-10% of the jobs go WFH, that is a massive impact that will reverberate throughout the economy, and I suspect once kids are back in school things will get better for pretty much all of those WFH issues.

We'll see, I'll try to find the full article but the surface detail is meh, that stuff will get better with time.

Re: American Express reported an 85% slump in quarterly profit...

iced — Sat, 01 Aug 2020 12:42:34 GMT

@Revelate wrote:
"Projects are taking longer, collaboration is harder, and training new workers is a struggle. The Wall Street Journal says remote work isn’t going to be sustainable for much longer"

Oh my, with everyone WFH, the companies and their organizations need to adapt too? Say it isn't so!

I'll be the first to admit my "new hire orientation" would've been better in person and might have formed more lasting relationships with the people in that class (god I've gone so corporate) but it worked out OK... I didn't have any high expectations on that front to begin with honestly having been a contractor for 18 months in my role and knowing I will have very little overlap with nearly anyone going through it.

It's a new model that companies will have to adapt to and those who are thinking they can just keep doing things the ways they have always done are going to be tomorrow's dinosaurs anyway. I didn't find the full article but from the part I could read, color me skeptical that it is the only way it's going to happen.

Even if only 5-10% of the jobs go WFH, that is a massive impact that will reverberate throughout the economy, and I suspect once kids are back in school things will get better for pretty much all of those WFH issues.

We'll see, I'll try to find the full article but the surface detail is meh, that stuff will get better with time.

Sure 5-10% more will work from home; that's realistic. This pipe dream everyone with soul sucking commutes and crappy desk jobs has that they'll be free to rebalance life and work with WFH is just that, though - a pipe dream.

In our field, the big detriments are in collaboration. As a WFHer for 6 years now, webex and zoom just do not, can not, and will not replace the intangible value from in-person whiteboard sessions and meetings.

Most think big tech is going to lead this new WFH charge. I can also say my large cap tech employer is already back to 50% in the office and is chomping at the bit to get back to 100%. They're not alone, either.