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

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Super Contributor

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

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."

 

 



Last HP 09-14-2020



Message 1 of 42
41 REPLIES 41
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Community Leader
Mega Contributor

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

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







Message 2 of 42
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Epic Contributor

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

Thanks for posting the article @Adkins !

Message 3 of 42
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Moderator Emeritus

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


@Brian_Earl_Spilner wrote:

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


Wouldn't you? Smiley Wink

 

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.




        
Message 4 of 42
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Moderator

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

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. 

 

 

 

 

 

A proof Chase hates me....Pre-approved Subaru.
Message 5 of 42
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Regular Contributor

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


@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.

Message 6 of 42
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Moderator

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

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. 

A proof Chase hates me....Pre-approved Subaru.
Message 7 of 42
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Moderator

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

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.

Message 8 of 42
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Regular Contributor

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


@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.    

Message 9 of 42
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Community Leader
Mega Contributor

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


@Revelate wrote:

@Brian_Earl_Spilner wrote:

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


Wouldn't you? Smiley Wink

 

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.

 

 







Message 10 of 42
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